Taxpayers Charter defines taxpayers rights and obligations under the Income Tax Act

Taxpayers Charter is for building trust between the taxpayer and the income tax department. The Taxpayers Charter defines a taxpayer’s rights and obligations under the law. It also specifies the department’s commitment to providing services to the taxpayers. The Charter is a step in bringing in transparency in the tax services from the department and tax compliance by a taxpayer.

Taxpayers Charter

The Union Budget 2020 provided for the introduction of a Taxpayers Charter to aim for clean and corruption-free governance. The tax administration seeks efficiency in the delivery of services and to be fair and just with taxpayers. The objective is to end taxpayer harassment or undue scrutiny from tax officers. The Union Budget 2020 inserted a new section 119A to notify a Taxpayers Charter specifying the taxpayers’ rights and obligations. Accordingly, a new Taxpayers Charter was notified effective from 13 August 2020.

Taxpayers’ rights and commitments from the department

The taxpayers’ rights under the Charter are:

1. To assist taxpayers in a courteous, fair and reasonable manner.
2. To treat taxpayers as honest unless the department has a reason to believe otherwise.
3. To provide for a fair and impartial appeal procedure and review mechanism.
4. To provide accurate and complete information for tax compliance purposes.
5. To complete and decide income tax proceedings in a time-bound manner.
6. To ensure the collection of the correct amount of tax dues.
7. To respect a taxpayer’s privacy and to conduct an enquiry or examination after following the due process under the tax law. There will be no undue enquiry or enforcement actions.
8. To maintain the confidentiality of information provided by the taxpayers. There will be no disclosure unless required under any other law in force.
9. To ensure accountability for the actions of the income tax officers.
10. To give a taxpayer the freedom to choose their authorised representatives as per the income tax law.
11. To put in place a procedure to raise complaints and grievance redressal mechanisms.
12. To adopt a fair and impartial approach to the resolution to tax disputes.
13. To review and publicly report the standards on delivery of services.
14. To consider the cost of compliance, administration and collection of taxes. The department seeks to reduce the cost of tax compliance for a taxpayer.

Taxpayers’ obligations

The taxpayers’ obligations under the Charter are:

1. To make a complete and honest disclosure of facts and information to the department. The taxpayer should ensure compliance with all the tax filing and reporting obligations.
2. To seek an understanding of the tax obligations applicable to a taxpayer. For this purpose, a taxpayer can seek clarifications and assistance from the department.
3. To maintain accounting records and documents as prescribed under the income tax law.
4. To be informed about the representations before the department and seek details from their authorised representatives.
5. To respond to income tax notices and information requests in a time-bound manner.
6. To pay their income tax dues and comply with their filing requirements within the due dates.

Recent initiatives on e-assessment and e-appeal

The income tax department initiated an e-assessment scheme on a pilot basis in 2019 and planned to introduce a full-fledged e-assessment system. A taxpayer need not visit the department for responding to any tax notice or other enquiry. The e-assessment scheme brings in transparency and accountability for the taxpayers and the department. The government makes e-assessment mandatory from 13 August 2020 for all income tax proceedings.

The Union Budget 2020 had also announced to bring in e-appeal or faceless appeal. The department will frame an e-appeal scheme and introduce the same on 25 September 2020. All the initiatives of e-filing of income tax return, e-assessment, DIN for communication with the department and e-appeal seek to streamline a faceless interaction between the department and the taxpayer.

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