National, 03 May 2024: Driven by technological advancements and the government’s proactive initiatives, India is set to witness a monumental shift in its tax administration landscape. Deloitte India’s latest paper, “Annual Information Statement: Ushering in a new era of tax administration”, provides insights into this evolution while outlining a detailed overview of AIS, a pioneering initiative by the Indian Income Tax Department to provide a seamless taxpayer experience.
In the interim budget 2024-25, Finance Minister Nirmala Sitharaman highlighted various initiatives being taken by the government to improve taxpayer services. These initiatives include the introduction of faceless assessment and appeal, and the provision of updated income tax returns. AIS is another significant addition to the government’s array of ongoing initiatives. The paper, based on extensive consultations with stakeholders including tax administrators, highlights the tax department’s initiatives for increasing taxpayer awareness; these initiatives have been praised by the OECD.
AIS offers taxpayers a comprehensive overview of their financial information, aiding in streamlined tax planning. The system has quickly become indispensable, empowering taxpayers with insights for informed decision-making and ensuring compliance with tax regulations.
The paper further delves into the objectives and benefits of AIS and proposes certain recommendations for improvement. With India’s proactive stance on using technology and digital solutions, there is a clear opportunity to optimally enhance and use the functionality of AIS and strengthen its position as a cornerstone of modern tax administration.
Adding to this, echoing the PM’s vision, Gokul Chaudhri, President-Tax, Deloitte Touche Tohmatsu India LLP, applauded India’s strides in tech-driven tax administration. India’s proactive embrace of technology, exemplified by initiatives such as the AIS, heralds a new era of efficiency and transparency in tax administration while providing a seamless experience for taxpayers, empowering them with valuable insights. Continuous data exchange, direct reporting automation, and unified compliance can solidify this transformation.
Benefits
● Taxpayers:
- Pre-filled tax returns, reducing the compliance burden
- Mechanisms to rectify data discrepancies
- Improved taxpayer service
● Income Tax Department:
- Information-driven tax audits
- Increased tax base and revenue collection
- Reduced administrative costs
- Potential to tackle black money
To improve the functionality of AIS and the efficiency of tax administration and compliance, Deloitte recommends creating a seamless data exchange and establishing a framework for efficient data sharing among businesses, tax authorities and taxpayers. To reduce errors and improve accuracy, it also proposes implementing automated reporting processes using standardised accounting software for direct tax reporting. Adopting the “One Taxpayer, One Government” approach can unify compliance and audit procedures across tax departments, promoting uniformity and coherence in tax administration. Additionally, the paper highlights streamlining the technological foundation for government revenue applications and learning from global best practices.
Embracing modern technologies holds the key to enhancing taxpayer services, promoting voluntary compliance and expanding the tax base, thereby easing administrative burdens. Therefore, the Indian government must sustain its focus on digitisation within the tax domain and further augment the functionality of AIS.
