India’s New Taxation System

Why is India’s New Taxation System Important?

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India’s Prime Minister Narendra Modi on Thursday launched the platform for “Transparent Transaction- Honouring the Honest”. This new platform aims at easing compliance and expediting refunds to benefit the honest taxpayers. The Prime Minister said this platform will focus on making the tax system people-centric and public friendly, banking the unbanked, securing the unsecured, funding the unfunded, and honouring the honest. According to him, several factors such as policy-driven governance, belief in people’s honesty, efficiency in bureaucracy, and use of advanced technology were responsible for the changes in the taxation system.

There have been consistent attempts of revamping the tax administration in India since 2014. The introduction of this platform is expected to carry forward the journey of direct tax reforms, following several measures that have been taken by the Central Board of Direct Taxes (CBDT) to aid taxpayers. The Finance Minister Nirmala Sitharaman also welcomed the platform by hailing yesterday as the ‘landmark day in the history of tax administration.’ “The CBDT has given a framework and put in place a system in the form of this platform, a transparent, efficient, and accountable tax system,” she further added. This platform is expected to bring several benefits to India’s new taxation system.

Here are the three significant benefits of this newly introduced taxation platform.

India’s New Taxation System

  1. Increased Convenience for Taxpayers

The platform has proposed faceless taxation, which means that the taxpayer and the tax officer will have no interaction. This has the potential to reduce interferences and empower the taxpayers. Furthermore, the tax department will have to carry out the steps and processes in a time-bound manner. Due to this, there will be increase in the trust and convenience among the taxpayers.

  1. Reduction in Bribery and Corruption

The CBDT has taken several initiatives for bringing in efficiency and transparency in the functioning of the Income Tax Department. One such initiative is the introduction of Document Identification Number (DIN), where every communication of the department would carry a computer-generated unique identification number. Measures like this will result in the reduction in such cases and more transparency of operations as well.

  1. Surge in Tax Collection

According to a report, there is only one taxpayer for 16 voters in India. Moreover, only 1.46 crore people in India pay tax on their income. The aforementioned benefits provided by the new platform are expected to increase the number of taxpayers in the country thereby increasing the overall tax collection.

Also read : The Top Benefits of a Financial Advisor to Fight COVID-19 Crisis

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