Accelerated Assessment in Income Tax: Meaning, Purpose, Procedure, Implications

Income tax is an amount that the government charges from individuals and businesses on their annual income. If an individual or business earns an annual income which exceeds the basic exemption limit, then they must pay income tax. 

Every taxpayer must submit all required details of their income by filing the information to the Income Tax Department. The department analyses all details filed by a taxpayer in a process called an assessment. There are different types of assessments that can be carried out by the concerned officials. 

One of the faster ways of assessing tax returns is accelerated assessment in income tax. It is more convenient than the traditional approach. Here’s all you need to know about it.

Meaning of Accelerated Assessment in Income Tax

As the name suggests, accelerated assessments lead to an expedited processing of your IT returns. It is one of the types of assessments of income tax. In this case, officials can verify the IT returns at a much faster pace, and arrive at the tax liabilities. By this, unnecessary delays are eliminated and efficiency is increased.

Purpose of Accelerated Assessment

Traditional modes of filing IT returns involve a lot of steps and are very time-consuming. It causes delays and can be difficult for taxpayers. The accelerated assessment of income tax beats this problem by providing a fast and efficient way to file IT returns.

It can help avoid potential cases of fraud and tax evasion. The tax authorities have ample amounts of time to not only examine the tax returns but also pursue necessary action in case of discrepancy or fraud. This allows them to scrutinise potentially risky taxpayers, and make them aware of their obligations. 

Thus, the whole process becomes efficient, and transparent, and leads to an increase in satisfaction for all stakeholders. 

Implications of Accelerated Assessment

The accelerated assessment in income tax can lead to several outcomes for both tax authorities as well as taxpayers. Some of the major implications are as follows:

• Improvement in Tax Collections: Accelerated assessment helps to prevent tax evasion and allows authorities to launch investigations in case of any discrepancy or fraud. Income tax officials can quickly study all the details and alert taxpayers about their liabilities and obligations. As the entire cycle of assessment becomes faster and more efficient, it can lead to an increase in tax collections.
• Faster Processing and Filing of IT Returns: The accelerated assessment makes the process of filing IT returns efficient and timely. It is a lot more hassle-free than the typical way of filing IT returns. Thus, it can not only instil more confidence among the taxpaying public but also lead to faster resolution of any potential discrepancies. In this way, it helps to keep the bureaucracy of taxation more transparent, clean, equitable, and open to scrutiny.
• Managing Threats to the Taxation System: There have been several notable cases of fraud and tax evasion in our country. With accelerated assessment in income tax, the authorities can inspect all the relevant information in a short period, and this leaves them with sufficient time to deal with threats to the taxation system. They can send notices, launch investigations, enforce regulations and mobilise resources to safeguard the country’s financial resources.

Benefits of Accelerated Assessment for Taxpayers

Accelerated assessment in income tax can yield many positive results for all stakeholders. Not only can it make the work of the bureaucracy a lot easier, but also raises the satisfaction of the taxpayers. Here are some of the benefits of accelerated assessment.

• Increase in Taxpayer’s Satisfaction: The accelerated assessment represents a break from traditional modes of assessing taxes. Traditionally, taxpayers have often found the process of filing IT returns complicated. It involves steps and processes which confuse the common man. 
  However, accelerated assessment in income tax makes filing IT returns a lot simpler. It is quick and removes doubts and confusion from the minds of taxpayers. They don’t have to harbour uncertainties in their mind anymore. It is a timely and transparent process, and a taxpayer gets updated in case there are any responsibilities that he or she has to fulfil. Thus tax compliance increases across the system.
• Minimising Risks and Enhancing Compliance: Tax officials can have the upper hand when it comes to identifying risks and fraud in the taxation system. They can scrutinise tax records to see if a taxpayer can potentially be part of a scam, or has not taken full responsibility for his or her liabilities. Once non-compliance is brought down, the whole system will become a lot more just, fair and equitable for all taxpayers.
• Rise In Efficiency: Accelerated assessment in income tax can cut down red tape in the bureaucracy. As hassles are removed, people will feel a lot more confident in filing their IT returns. Officials will also find it easier to enforce tax regulations and ensure compliance with norms and rules. 
  The assessment will be a lot quicker and taxpayers can be notified in case of any delays and discrepancies on their part. Removal of unwanted delays and hassles leads to a rise in the efficiency of the taxation system.

In this blog, we have discussed the effects and benefits of accelerated assessment in income tax. It promises to make filing of IT returns more convenient and quicker, and increase compliance with IT rules throughout the country. 

The Income Tax Department carries out this type of assessment in specific cases where the tax returns need to be quickly processed. This includes returns for shipping profits and returns filed by someone leaving the country permanently, etc.