Finance minister Nirmala Sitharaman asks I-T officials to ease burden on honest taxpayers

Finance Minister Nirmala Sitharaman on Friday asked Income Tax officials to focus on convenience for honest taxpayers and take firm action against deliberate tax evasion as she outlined five priorities for responsive tax governance on Income Tax Day.

Speaking at the 167th Income Tax Day celebrations, Sitharaman said the department’s role has expanded beyond tax collection to ensuring fairness, efficiency, ease of doing business and taxpayer service.

"Over more than a century and a half, the I-T Department has evolved alongside India's economic transformation, continuously adapting to meet the changing needs of the nation," Sitharaman said.


Also Read: Karnataka attracts $13 billion in FDI as tech, GCC investments surge

She said that the implementation of the Income Tax Act, 2025 has simplified the tax law by reorganising provisions, reducing uncertainty and lowering compliance costs.

The minister also said improvements in the e-filing portal, including higher computing capacity, storage, bandwidth and network infrastructure, helped it handle more than 1 crore taxpayer interactions in a single day, with peak daily interactions reaching around 1.6 crore.

During the ongoing filing season till July 21, more than 3.2 crore Income Tax Returns have been filed, of which nearly 94% have been verified and 60% processed. The department has received over 1.3 crore refund claims, with 96% verified and 40% processed.

Also Read: RBI likely used dollar deposit surge to cut record FX forward book, economists say

"... so the department must continue reducing processing timelines... Prompt refunds strengthen confidence in the fairness of the tax administration and improve liquidity for taxpayers," Sitharaman said.

The finance minister asked the department to follow the five Rs of Responsive Tax Governance, i.e., Recognise, Respond, Redress, Reflect and Reform.

"Our approach should ensure convenience for the honest taxpayer, an opportunity to correct bona fide errors, and firm consequences for deliberate evasion," she said.

Sitharaman said tax officials must distinguish between intentional tax evasion and genuine errors, adding that powers granted under tax laws should be exercised with humility.

A taxpayer is not merely an assessee but also a citizen and a partner in India’s development, she said.

The minister also stressed the need to reduce litigation and improve tax certainty.

"Tax certainty is one of the strongest foundations of voluntary compliance. Our longterm objective must shift from 'litigation management' to 'litigation prevention'," she said.

She said the implementation of the Income Tax Act, 2025 should be supported by consistent guidance and regular engagement with taxpayers, professionals and industry as India’s economy continues to evolve.

"Ultimately, tax certainty is an economic imperative that improves the ease of doing business and strengthens India's competitiveness as a global investment destination," Sitharaman said.

Revenue Secretary Arvind Shrivastava said reducing tax litigation remains a key focus area of the government’s reform agenda. The Income Tax Department disposed of 2.24 lakh appeals in 2025-26, 30% higher than the previous fiscal, he said.

Shrivastava said the department has used clearer legislative drafting, simplified procedures, technology adoption and standardised processes to reduce ambiguity and disputes.

"These measures need to be further strengthened to enable faster and more efficient resolution of tax disputes while safeguarding revenue," he said.

CBDT Chairman Ravi Agrawal said taxpayer grievance resolution has improved significantly, with the department addressing 77,765 CPGRAMS grievances in 2025-26 and disposing of 72,933 cases, achieving a 94% disposal rate.

The department also handled 3,43,269 e-Nivaran grievances, disposing of 3,26,217 cases, resulting in a 95% disposal rate. Agrawal said efforts are also underway to identify the root causes of repeated grievances to reduce taxpayer difficulties.