Tax Reforms

Faceless Tax Scheme

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Faceless Tax Scheme

Mains level : Ease of IT returns

The government’s faceless tax assessment scheme has managed to deliver about 24,000 final orders since its introduction in August 2020.

Try this PYQ:

Q. With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct?

  1. It is introduced as a part of the Income Tax Act.
  2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the “Double Taxation Avoidance Agreements”.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Faceless Tax Scheme

  • The Central Government introduced the Faceless Assessment Scheme to provide greater transparency, efficiency and accountability in Income Tax assessments.
  • It is an attempt to remove individual tax officials’ discretion and potential harassment for income taxpayers.
  • All provisions introduced under Faceless Assessment, under the Income Tax Act, 1961, are introduced to-
  1. Eliminate the interface between the Assessing Officer and the assesses during the course of proceedings, to the extent that is technologically feasible
  2. Optimize the utilization of resources through the economies of scale and functional specialization and
  3. Introduce a team-based determination of arm’s length price with dynamic jurisdiction.
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