99% of Tax Returns Accepted on Trust: Only 1% Face Scrutiny
By: Admin
January 11, 2025
Categories: Income Tax News | News
4 Min Read
The Indian tax system operates on a trust-based model, with over 99% of tax returns accepted without scrutiny, according to The Economic Times. Only 1% of returns are selected for scrutiny based on credible third-party information.
How Scrutiny is Conducted
The scrutiny process leverages algorithm-based data analytics to flag high-probability cases of tax irregularities. Cases selected for review are subject to objective criteria, ensuring transparency and fairness. Taxpayers are given a fair opportunity to present their case during the reopened assessments.
To further eliminate bias, the government introduced the faceless assessment scheme, ensuring impartiality and minimizing harassment.
Challenges in Tax Dispute Management
Despite these advancements, the Comptroller and Auditor General (CAG) has reported inefficiencies in managing direct tax disputes. Key issues include:
Inflated tax demands
Incorrect interest levies
Errors in implementing appeal orders
These inefficiencies result in delayed refunds and unnecessary taxpayer harassment. Currently, around 580,000 tax appeals remain unresolved, underscoring the need for systemic improvements.
Government Measures to Reduce Litigation
The government has taken proactive steps to address tax disputes and reduce litigation, including:
- Faceless assessments: Team-based evaluations to ensure unbiased assessments.
- High-pitched committees: Regional panels to resolve complaints about excessive assessments.
- Vivad Se Vishwas scheme: Launched in 2020 to resolve disputes and reduce case backlogs.
- Higher monetary thresholds: Increased thresholds for appeals to reduce the volume of cases.
Additionally, taxpayers can now file applications for appeal-effect or rectification of orders directly on the e-filing portal. This move aims to expedite case resolutions, minimize delays, and enhance efficiency.
India’s tax system continues to evolve, balancing trust with efficiency while striving to address taxpayer concerns and reduce litigation.
