How has the faceless tax regime impacted direct taxes in India? What is the case for a similar system being implemented for GST?

October 14, 2023 February 21, 2024

The faceless tax regime was launched in 2020 with an objective to promote efficient and effective tax administration, by minimizing physical interface, increasing accountability and introduction of team based assessments.

Impacts:

  • The faceless tax regime has considerably reduced the corruption and harassment of taxpayers by the tax department officials.
  • It has made the system transparent and taxpayer friendly.
  • Removal of individual biases and subjective judgements.
  • No need for personal interaction with tax officers significantly saves the time and effort of the taxpayers. It also reduces the chances of harassment.
  • Data shows that even tax compliance has increased.
  • The first appellate authority, i.e. the CIT appeal is also faceless.
  • It has made the complete system online, from the filing of returns to the assessment orders. This has considerably reduced the requirement for huge storage facilities for the records of taxpayers.
  •  There is a need for physical interaction only in the case of investigation and international taxation matters.

Should faceless system be introduced in GST:

  • GST has surely rationalized the indirect taxes and reduced the chances of harassment and corruption.
  • It has also resulted in more efficiency and transparency, along with reduced cases of tax evasion.
  • The faceless tax regime has resulted in significant benefits, however GST remains face-to-face.
  • However, there are several complexities involved in making the GST proceedings faceless.

Conclusion:

The introduction of tge faceless tax regime in the income tax department has removed the chances of corruption from the system, however, corruption still persists in the case of indirect taxes because of face-to-face interaction.

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