Target tax evaders, don't harass honest taxpayers: Sitharaman to I-T officials

Finance Minister Nirmala Sitharaman on Friday urged income tax officials to crack down on deliberate tax evasion while ensuring that honest taxpayers are not subjected to unnecessary hardship, stressing that genuine mistakes should be treated differently from wilful non-compliance.

Addressing the 167th Income Tax Day celebrations, Sitharaman called on the department to adopt a taxpayer-centric approach and outlined the government's vision for a more responsive and efficient tax administration.

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

The Finance Minister also reminded tax officials that the powers conferred under tax laws must be exercised with humility, noting that a taxpayer is "not merely an assessee but also a citizen and a partner in India's development."

Focus on reducing litigation

Sitharaman said the department should shift its focus from merely managing tax disputes to preventing them altogether, saying certainty in tax administration is critical to encouraging voluntary compliance.

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

She added that the implementation of the Income Tax Act, 2025 should be accompanied by consistent guidance and continuous engagement with taxpayers, professionals and industry to address emerging issues as India's economy evolves.

According to the minister, the new law simplifies tax provisions by reorganising the legislation, reducing ambiguity and lowering compliance costs.

ITR filing gathers pace

Highlighting the progress made during the ongoing return filing season, Sitharaman said more than 3.2 crore Income Tax Returns (ITRs) had been filed as of July 21, with nearly 94% verified and 60% already processed.

She also said the department had received over 1.3 crore refund claims, of which 96% had been verified, while around 40% had already been processed.

"Prompt refunds strengthen confidence in the fairness of the tax administration and improve liquidity for taxpayers," she said, urging officials to continue reducing processing timelines.

The Finance Minister also noted that the upgraded e-filing portal is now capable of handling more than one crore taxpayer interactions in a single day, with peak daily interactions touching 1.6 crore.

Revenue secretary Arvind Shrivastava said reducing tax litigation remains a key reform priority, adding that the department disposed of 2.24 lakh appeals during FY26, about 30% higher than the previous year.

Meanwhile, CBDT chairman Ravi Agrawal said grievance redressal has improved majorly, with the department achieving disposal rates of over 94% across taxpayer grievance platforms while working to address the root causes of recurring complaints.