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How Technology Aids in Filing Tax Returns

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Within two years, verification and scrutiny of returns will happen electronically. Read on to know how more about it…

Within the next two years, verification and scrutiny of tax returns will happen electronically through anonymised back offices manned by tax experts and officials. Filing tax returns will function without any personal interface between taxpayers and tax officers. Both the taxpayer and the tax officer will not know each other — who is scrutinising whose return, and at which place.

The government of India has been using technology extensively to make taxpayers’s lives easier. Even during the interim Budget, the finance minister of India highlighted the progress that has been made on the increased use of technology by the tax department. Several functions such as returns, assessment, refunds and queries are now undertaken online. With a massive increase in the number of tax return files — almost 68.5 million — it is not easy to deliver a taxpayer-friendly experience. Strong technology support is required to process returns without errors and to carry out other functions online.

Proposed Project
As the Finance Minister announced in his speech, the government has approved a technology-intensive project wherein tax returns will be processed within 24 hours and refunds will be issued simultaneously. This will certainly ease taxpayers’ time. It means if they have refunds, they will get it back almost immediately. Questions and queries will be raised by the income tax department sooner, making it easier for taxpayers to respond, as the details will be fresh and handy.

The Finance Minister mentioned that within the next two years, verification and scrutiny of returns will happen electronically through anonymised back offices manned by tax experts and officials.

Advantages
Filing tax returns will function without any personal interface between taxpayers and tax officers. Both the taxpayer and the tax officer will not know each other — who is scrutinising whose return, and at which place. Exchange of information will happen electronically in a faceless manner. This will certainly boost the confidence of taxpayers as the latter still fear visiting tax offices. It will also help reduce corruption. The government will also be able to utilise its workforce optimally.

The tax authorities will be able to use tax experts to add to the knowledge domain in processing assessments. This will in turn help bring in more transparency and reduce litigation. Electronic scrutiny has already become a reality as it has been made mandatory.

The recent cycle of scrutiny of returns for assessment year 2016-2017 was completed electronically on December 31, 2018. However, both the jurisdictional assessing officer and the taxpayer know each other. In certain circumstances, the assessing officer also has the authority to call on the taxpayer to appear in person.

After demonetisation, it was the use of technology that enabled the tax authorities to identify individuals whose deposit of money in their bank accounts was not corroborating with their income level and other details available with the tax authorities. Even now, those who are yet to file their tax returns for financial year 2017-2018 have been sent a communication to file them or submit a response through the compliance portal online.

While technology helps to check non-compliance, it has also begun to help in bringing down the compliance burden on taxpayers, providing ease of filing return, or interacting with the tax authorities. Whether you are in India or abroad and you need to file return or submit any details, all this can now be done practically anytime and from anywhere. Even pre-filled return forms can be downloaded when you file your tax return. It automatically captures your personal details and details of taxes deducted or paid, and so on. You just need to review the details and modify and provide other current details to complete your tax filing.

The Road Ahead
The government’s focus on automation and use of high-end technology thus raises the hope that taxpayers will enjoy a more user-friendly experience in the times to come. With a high tech and interconnected compliance environment, the chances of hiding income will reduce considerably. It will help India move towards becoming a more tax-compliant society.

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