Income Tax Rules Changed: CBDT made the fourth major change in the income tax rules! New forms released for valuers and tax practitioners, know complete details

The Central Board of Direct Taxes (CBDT) has notified another important amendment to the income tax rules with the aim of making the country’s taxation system more transparent, technologically advanced and accountable. Under the ‘Income-Tax (Fourth Amendment) Rules’ issued by the government, far-reaching changes have been made in the rules related to registration, functioning and reporting of Registered Valuers who evaluate property and assets and Income Tax Practitioners who appear in departmental proceedings on behalf of taxpayers. This amendment has been directly implemented for chartered accountants, advocates, tax consultants and registered valuers working in major financial centers like Delhi, Mumbai, Lucknow, Ahmedabad, Kolkata and Chennai. The Revenue Department under the Finance Ministry has issued a detailed official notification in this regard and has also introduced new statutory forms.

The role of valuers is the most sensitive in determining the fair market value of any type of property, immovable property, jewellery, shares, virtual digital assets or unlisted equity under the Income Tax Act. In the proceedings of scrutiny, capital gains assessment and search-survey, the valuation report becomes the main basis for tax determination. As per the new amendment, the Board has completely digitalized and standardized the format of registration, renewal of valuers and submission of their valuation reports.

Now it has been made mandatory for any valuer, while applying for valuation work, to give complete details of his professional qualification, minimum work experience and registration with authorized bodies like Council of Architecture or Insolvency and Bankruptcy Board of India (IBBI) through a new electronic form. Additionally, specific forms have also been prescribed for valuation reports, so that the methodology adopted during valuation, benchmark rates and basis of calculation are completely clear and there is no scope for unnecessary disputes before the Tax Assessing Officer (AO).

CBDT has also tightened and streamlined the process for professionals to get authorized as Income Tax Practitioners (ITP). A new form of application has been notified for tax practitioners representing taxpayers under the provisions of the Income Tax Act.

The new form includes digital verification of the practitioner’s educational background, legal qualification, PAN, Aadhaar and professional certificates. While earlier many processes depended on paper documents and manual certificates, now the data of these professionals will be directly linked with the e-filing portal. Before representing any taxpayer in faceless proceedings, the practitioner will have to submit a valid registration number and digital authorization in the system, so that the possibility of fake or untrained consultants misleading the taxpayers can be completely eliminated.

The biggest technical impact of this fourth amendment will be on the ‘Faceless Assessment System’ of the Income Tax Department. CBDT aims to bring all stakeholders on a single seamless digital platform with the National e-Assessment Center (NeAC). When a report is sought from the Valuation Officer or Independent Valuer in any case, the report will be directly uploaded online on the system in the new prescribed form, with mandatory time-stamp and digital signature.

Similarly, verification of replies and arguments filed by tax practitioners will also be done through the new database. This will eliminate the need for personal contact between departmental officers and tax consultants and will speed up the assessment.

According to tax experts and CA professionals, this step of CBDT will significantly raise the level of taxation compliance:

• Standardization and Transparency: With the introduction of new forms, a uniform standard of valuation of properties will be established across the country, which will prevent different discretionary assessments according to the states.

• Reduction in disputes and lawsuits: Clear valuation methods and standardized forms are expected to significantly reduce capital gains and fair market value litigation pending in the ITAT, High Courts and the Supreme Court.

• Protection of Taxpayers: Responding to notices by unauthorized persons posing as tax practitioners will be curbed and taxpayers will be able to get the services of only verified and qualified professionals.

• Time bound disposal: Due to direct integration of digital forms with e-proceedings, disposal of pending appeals and assessment orders will be completed within the stipulated time limit.