Finance Minister urges IT Department to Simplify Tax Notices; Avoid ‘threatening tone’ and Encourage Compliance

Union Finance Minister Nirmala Sitharaman encouraged the Income Tax Department on Wednesday to work toward becoming known as fair and friendly.

The FM was speaking on the occasion of the 165th anniversary of Income Tax and commended Indian taxpayers for their contribution to the economy.

Sitharaman used this opportunity to stress the importance of simplifying the language used in income tax notices and letters to the public.

“Tax notices should be simplified so that individuals may better understand them. Can we look at issuing clear, easy-to-understand notices?FM Sitharaman asked.

Furthermore, the FM urged the income tax agency to avoid using “threatening language” in tax notices.

“Let the process of filing a tax return on the first day be as satisfying as filing it on the last day. We must ensure that threatening language is avoided in tax notices and messages,” the FM stated.

FM Sitharaman also underlined Prime Minister Narendra Modi’s objective of a “simple system”. She urged the tax administration to approach the taxpaying public with greater transparency and less intimidation.

“Prime Minister Narendra Modi had been absolutely certain from the beginning that we need to provide a simple system,” the chief minister said.

Furthermore, FM Sitharaman said that India gained 58.57 lakh new tax filers this year.

She praised tax officers’ accomplishments with this collection and stated that they had to overcome obstacles over the last ten years to obtain this goal.

“India and tax officers have faced numerous challenges over the last ten years. The combined effort of taxpayers and income tax officials has resulted in the highest ever income tax collection,” Sitharaman declared.

She also announced that at least a portion of the Tax Code will be streamlined within six months.

Sitharaman stated that 72% of all taxpayers have switched to the new tax systems. She described the new tax scheme as clear and outlined its benefits.

“The second tax scheme is basic, with no exemptions or problems. 72% of all taxpayers have switched to new tax systems,” she stated.

Sitharaman added that India’s direct taxation is assisting taxpayers in transitioning to a simpler tax system.

“Indian direct taxation is about understanding people’s needs and allowing them to migrate to a simpler tax system. The approach is one of nudging rather than forcing regimes,” the FM remarked.

The FM stated that this method of tax collecting improves compliance and broadens the tax base.