The income tax department has adopted a more participative approach and is no longer an adversarial department, said CBDT chairman Ravi Agrawal at a FICCI event on Monday.
Highlighting the department’s evolving role, Agrawal noted, “We have seen a paradigm shift in the approach towards governance in the direct tax area. ‘Trust first’ is the basic theme guiding our actions.” He emphasised that the tax administration is adopting progressive policies aimed at providing stability and enhancing the ease of doing business in India.
Finance Minister Nirmala Sitharaman, in her Budget speech, underscored the government’s new mantra for the tax department – “trust first, scrutinise later.” This shift is intended to foster a more transparent, user-friendly, and business-friendly tax environment.
Agrawal elaborated on the department’s focus areas, stating, “Our approach is changing; we are following a prudent and proactive method. We are moving towards an enabling environment characterized by rule-based, user-friendly, and data-driven practices.”
He further explained the department’s new framework under the acronym ‘PRUDENT,’ which stands for Proactive approach, Rule-based, User-friendly, Data-driven, Enabling environment, Non-intrusive tax administration, and Technology and transparency.
“R is rule-based and U is user friendly, D is data-driven, E is enabling environment and N is Non intrusive tax admin and T is technology and transparency…We have a participative approach”, he stated.
The CBDT chairman also highlighted recent reforms, including the rationalisation of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).
“We have taken four major steps: optimising thresholds, reducing the number of rates, decriminalising certain offences, and rationalising specific features to simplify compliance,” he said.
Agrawal invited suggestions from stakeholders, assuring that all recommendations would receive equal attention.
“I request you to give us suggestions and each of those would get equal attention and we would try to incorporate. We want to give an act which is easy to comply with. We have expanded provisions for start-ups and IFSC,” he noted.
“We want to deliver an Income Tax Act that is easy to comply with,” he stated, adding that provisions for start-ups and International Financial Services Centres (IFSC) have been expanded to encourage growth and innovation.
