• Notification Date: 22-11-2023
• Notification No: N/A

Experts Demand for Re-evaluation of Faceless Tax Audit Scheme and GST-Income Tax Reconciliation Flexibility

Experts are urging a comprehensive review of the faceless tax audit scheme, emphasising the need for a more lenient timeline for reconciling goods and services tax (GST) with income tax returns. This call for reconsideration was made during a virtual session organised by public policy think tank Empower India. Ajay Rotti, Founder and CEO of Tax Compass, expressed concerns about the challenges posed by the current requirement for detailed turnover reconciliations, citing short deadlines, excessive documentation, and a partial understanding of GST laws. Rotti highlighted the impact on taxpayers, stating that unwarranted adjustments often occur despite comprehensive explanations and documentation, reported Business Today. 

Representations from various industries and trade associations have been submitted to the Central Board of Direct Taxes (CBDT), collectively seeking a revamp of the faceless tax audit scheme introduced in 2020. Empower India has also submitted recommendations to the CBDT, proposing changes such as the establishment of standardised GST and income tax reconciliation templates, the inclusion of turnover reconciliation in tax audit reports, and the request for upfront information on significant items to reduce reliance on show-cause notices. The Faceless Tax Audit Scheme is a government initiative aimed at transforming the traditional tax audit process by leveraging technology and reducing human interface. Introduced in 2020, this scheme is part of the broader objective to enhance transparency, efficiency, and accountability in the taxation system. 

Under the Faceless Tax Audit Scheme, the identification of tax officers involved in the audit process is eliminated, and interactions between taxpayers and tax authorities are conducted online. The scheme is designed to minimise the scope for corruption, streamline procedures, and create a comprehensive digital trail of audit proceedings.