Last mile reforms can galvanise income tax collections

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India is close to a regime of auto filing based on financial footprint in both direct and indirect taxes.

It was extremely motivating to listen to Prime Minister Narendra Modi and finance minister Nirmala Sitharaman on this bold structural reform. For the first time, one feels that the nation will rise up to the call of the leadership to be fearless and responsible. As in all great reforms, the ultimate advantage will flow in with flawless execution. The atmosphere created will certainly provide superb execution by the revenue department under the leadership of the chiefs of both direct and indirect taxes.

India is close to a regime of auto filing based on financial footprint in both direct and indirect taxes. Once all taxes are pre-determined and constructed from the robust tax information system already in place, artificial intelligence and machine learning will combine to make India adopt a fully functional tax determination paradigm. Assessment and litigation will be virtually eliminated and appeal on a faceless basis will become completely meaningful. A robust system of governance and self-correction will complete the process.

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Another area that becomes eminently possible to execute is to move from “vivad to vishvas to samadhan”. All open tax litigation may be grouped, taken up for resolution by specialist tax tribunals empowered by AI, ML, blockchain and a voice-to-text facility that will provide for a two-day gap in pronouncing the final verdict. If the orders giving effect can be automated, the tax collection/refund could also be processed from the already available and updated information about every assessee. This will transform tax compliance and ease of doing business.

Another area crying out for automation support and fair queuing is the one involving grant of concessions and reliefs. If the principles of statistical sampling are applied to the process, all queues can be significantly reduced.

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The citizen’s tax charter may have an automatic feedback facility where the satisfaction on all counts can be objectively fed back. A moving objective score on a scale of 0-10 by collectorates on speed of tax determination, litigation resolution and permission granting can create the necessary traction to raise taxpayer satisfaction.

If the valuable initiatives that are undertaken can be made known to citizens, the knowledge of where the tax rupees are spent will generate a virtuous cycle of compliance. The resources that are freed up by these exemplary processes can be redeployed to attract new assesses, to hand hold first time filers, to protect those who are unable to reach out for redressal and to generally create a vibrant education and compliance ecosystem.

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The bold steps announced are welcome. As in all processes in life, progress can be made only if there is collaboration, trust and simplicity. May all this initiatives make the country’s tax system an example for many countries to emulate.

(Shailesh Haribhakti is corporate leader based in Mumbai. He is a chartered and cost accountant, and writes regularly on the Indian economy and public policy.)

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Shailesh Haribhakti is a Chartered and Cost Accountant, an internal auditor and a certified financial planner. He is a board chairman, audit committee chair and independent director at some of the country's most preeminent organisations. He is a thought leader on the Indian economy and public policy.