Sitharaman calls for taxpayer-friendly regime, curbs on litigation | Today’s news
With the July 31 deadline for filing Income Tax Returns (ITR) approaching, Finance Minister Nirmala Sitharaman on Friday asked officials to make the system more taxpayer-friendly by making compliance easier for honest taxpayers while taking strong action against tax evasion. According to her, certainty in the tax regime is key for the economy.
On the occasion of the 167th Income Tax Day celebrations, Sitharaman said the ministry should give taxpayers an opportunity to rectify mistakes in good faith.
“Our approach should ensure comfort for the honest taxpayer, an opportunity to correct bona fide mistakes and firm consequences for willful evasion,” she said, adding that the taxpayer “is not just an assessee; the taxpayer is a citizen and a partner in India’s development”.
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Calling for a shift from litigation to litigation prevention, the minister said tax certainty is one of the strongest foundations of voluntary compliance and an economic imperative that facilitates ease of doing business while strengthening India’s competitiveness as a global investment destination.
She called on tax officials to deal with appeals fairly and consistently so that taxpayers gain confidence in the system instead of resorting to litigation. Litigation prevention should rest on three pillars: clarity of taxpayer obligations through timely circulars, uniform interpretation across jurisdictions, and institutional learning from appellate orders to shape future reforms.
Withdrawals, returns and refunds
The Minister noted that the total pendency of appeals fell by more than 34,000 cases to around 5.4 lakh, while around 6,000 appeals were withdrawn following the increased monetary thresholds announced in the 2024-25 Budget, allowing the Department to focus on cases involving substantive legal issues.
The tax department has evolved from a primary tax collection agency to one focused on fairness, efficiency, ease of doing business and service to taxpayers, she said, adding that the implementation of the Income Tax Act of 2025 simplified the law by reorganizing provisions, reduced uncertainty and reduced compliance costs.
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As of July 21, over 3.2 million income tax returns have been filed, of which nearly 94% have been verified and 60% processed. The department also received more than 1.3 million refund requests, with 96% verified and 40% processed.
In assessment year 2025-26, over 7.3 million income tax returns were filed, surpassing the previous year’s level, while both gross and net direct tax collections registered a growth of 4-5% in FY26.
Responsive tax administration
Sitharaman laid out the “5 R’s of Responsive Tax Administration”: Recognize, Respond, Remedy, Reflect and Reform. Every taxpayer complaint must be acknowledged immediately, addressed with clarity and empathy, resolved within deadlines, analyzed for recurring patterns and used to improve systems and procedures, she said.
It also ordered the department to further reduce refund processing times, saying speedy refunds will boost taxpayers’ confidence in the fairness of the tax administration and improve liquidity. During FY26, the department disposed of 94% of nearly 78,000 complaints received through CPGRAMS, reducing the average disposal time from 57 days to 28. Through the e-Nivaran platform, 95% of the 3.5 million complaints were disposed of, reducing the average disposal time to 42 days.
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Revenue Minister Arvind Shrivastava said the department disposed of 2.24 lakh appeals in FY26, a 30% increase over the previous fiscal year.
The department has sought to reduce litigation through clearer legislative design, streamlined procedures, greater use of technology and standardized processes, while taking concrete steps to reduce litigation at the first appellate level. said Shrivastava.
