Tax harassment will end, assures Sitharaman

New Delhi: Finance minister Nirmala Sitharaman assured India Inc. that businesses will not face any harassment by tax officials and that a new system has been put in place to make officials accountable for their communication with the assessee. The minister also articulated the government’s intent to respect wealth creators, a sentiment that Prime Minister Narendra Modi shared in his Independence Day speech earlier this month.

Sitharaman’s assurances seems to be a direct fallout of industry leaders speaking out about tax officials harassing businesses. It also indicates that the direct tax administration, which has been leading a drive against black money and tax evasion, will be closely monitored by the political leadership on how it conducts its enquiries and assessments.

“There won’t be any fishing expedition by officials,” Sitharaman told reporters here. The minister said a new centralized computer system has been set up for issuing income tax orders, notices and summons with a unique document identification number, or DIN, effective 1 October.

“This is one way in which fears of harassment of assessee can be addressed. Unless a notice or document carries a DIN, it need not be taken seriously by the assessee at all,” she said. The government will continue its shift away from prosecution to monetary penalty for minor offences under the Companies Act and issue faster approvals to make life easier for businesses. “I want to assure that we are responsive and the reform process will continue. There is no intention to prosecute.”

Sitharaman highlighted steps taken to improve ease of living and ease of doing business, including pre-filling and faceless scrutiny of income tax returns, simplification of goods and services tax return forms, quicker tax refunds, compounding of offences, and self-certification for startups.

“This is a much-needed announcement to build confidence with tax payers. The important part will be execution as to how this trickles down in the tax administration and how quickly the tangible differences are seen,” said Girish Vanvari, founder of advisory firm Transaction Square.