NEW DELHI: Finance minister Nirmala Sitharaman on Friday asked income tax officials to ensure convenience for honest taxpayers and take firm action against evaders. Emphasising the need to be empathetic, Sitharaman said the department should know how to draw a line between those deliberately evading taxes and those committing bona fide errors.“Sometimes we make the error of treating the honest taxpayer (like) a deliberate evader and everybody goes home unhappy with us. We have to be intelligent. We have to be discrete,” said Sitharaman. She said that authority conferred by tax law must always be exercised with humility. “You do splendid work with technology. You try to do more. You want the revenue collected well. But somewhere, the taxpayer is left with a bitter taste in his mouth, when we slightly exert that empowerment given by the tax law. We have to reflect that power with a sense of humility, not to aggrandise yourself with it,” she said.Sitharaman listed out five priorities for the tax department – recognising every taxpayer’s concern promptly; responding with clarity, courtesy and empathy; redressing genuine grievances fairly and within a defined timeline; reflecting on the root causes of recurring grievances and using complaints as an opportunity for institutional learning; and reforming the processes, systems and procedures continuously so that similar grievances become increasingly rare. FM also stressed on reducing litigation and strengthening tax certainty as it is one of the strongest foundations of voluntary compliance and the long term objective must shift from “litigation management” to “litigation prevention”.She said this should rest upon three key pillars: Clarity in taxpayer obligations through timely circulars; consistency of interpretation across jurisdictions; and continuous institutional learning from appellate orders.The minister highlighted that despite a dedicated effort to reduce litigation, the total pendency has declined by merely 34,000 cases to 5.4 lakh appeals.“I appeal to the board (CBDT) to have one more review to see how you are going to handle this. It cannot be that the cases keep mounting and you are clearing the cases at some pace. It will take us a century to clear it,” said Sitharaman. However, she noted that the revised monetary thresholds, pursuant to budget 2024-25, 6,000 departmental appeals have been withdrawn, freeing resources for cases with substantial questions of law.Reiterating the need to implement the new tax law by consistent guidance and continuous engagement with taxpayers, professionals and industry, she said that India’s economy is evolving rapidly, and it will continue to generate new questions, and the department must remain agile enough to keep pace.
