TaxTMI 
TaxTMI 
Legal Implications of Faceless Schemes in Income Tax : Clause 260 of the Income Tax Bill, 2025 vs. Section 135A of the Income-tax Act, 1961
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.... The move to faceless processes is a direct response to concerns about subjectivity, corruption, and inefficiency in traditional tax administration, and is consistent with the government's Digital India initiative. This commentary provides a detailed analysis of Clause 260, examining its objectives, structure, practical implications, and potential challenges. It then compares Clause 260 with Section 135A of the Income-tax Act, 1961, highlighting similarities, differences, and the legislative evolution in this area. Objective and Purpose The primary objective of both Clause 260 and Section 135A is to empower the Central Government to introduce a faceless collection of information scheme for income-tax purposes. The legislative intent ....
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....timising utilisation of resources through economies of scale and functional specialisation. * Introducing a team-based exercise of powers, including calling for, collecting, processing, or utilising the information, with dynamic jurisdiction. This reflects a legislative mandate to create a robust, technology-driven framework for information collection, with a focus on objectivity and efficiency. 2. Power to Modify Application of Provisions (Sub-section 2) Clause 260(2) empowers the Central Government to, for the purpose of giving effect to the scheme made under sub-section (1), direct by notification that any of the provisions of the Act shall not apply or shall apply with such exceptions, modifications, and adaptations as specified in....
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....theme of Clause 260 is the elimination of physical interface between the taxpayer and the tax authority, to the extent technologically feasible. This is to be achieved through digital platforms, electronic communication, and automated systems. While this has the potential to reduce corruption and improve taxpayer experience, it also raises concerns about digital literacy, access to technology, and the risk of technical glitches or data breaches. Practical Implications 1. For Taxpayers * Reduced subjectivity and harassment: By eliminating physical interaction, taxpayers are less exposed to arbitrary demands or harassment by tax officials. * Need for digital literacy: Taxpayers will need to be comfortable with digital platforms and pro....
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....ases the risk of data breaches and misuse of sensitive taxpayer information. Comparative Analysis: Clause 260 (Bill, 2025) vs. Section 135A (Act, 1961) 1. Structural Similarities Both provisions are structurally similar, reflecting a continuity in legislative intent. The key features common to both are: * Enabling the Central Government to introduce a faceless collection of information scheme by notification. * Application to the calling for and collection of information, inspection of company registers, and exercise of powers by Assessing Officers. * Focus on efficiency, transparency, accountability, elimination of interface, resource optimization, and team-based dynamic jurisdiction. * Provision for the Central Government to mo....
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....rsight Both provisions delegate significant power to the executive to modify statutory provisions by notification. However, the requirement to lay notifications before Parliament is retained, providing a check on executive discretion. The lack of a temporal limitation in Clause 260 arguably increases executive discretion, but this is balanced by the requirement for parliamentary oversight. 5. Legislative Evolution and Policy Continuity Section 135A was introduced in 2020, reflecting a response to the COVID-19 pandemic and the need to minimize physical interaction. The success and acceptance of the faceless assessment and information collection schemes have led to their entrenchment in the new Income Tax Bill, 2025, with Clause 260 repre....