Make life easier for taxpayers, use technology to check evasion: FM to IT officers

New Delhi: Emphasising that taxpayers are not adversaries, Nirmala Sitharaman on Friday asked income tax officers to ease compliance for honest assessees while leveraging technology to crack down on wilful tax evasion.

Addressing the 'PRARAMBH 2026: Nationwide Awareness Campaign on the Income Tax Act, 2025', the minister also exuded confidence that the Income Tax Act, 2025, effective April 1, will certainly set the trend for making India a very tax-friendly country.

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The multimedia campaign, spanning print, radio, television, outdoor, digital and social media, has been designed to build awareness about the key features of the new Act, which is set to come into effect from the beginning of the next financial year.

"Make paying tax so easy that honesty becomes the natural choice. But those who are wilfully evading, those who are deliberately trying to get away, technology must catch them. If you are honest, the system will make your life easy, but if you evade, the system will find you. This message should go to the taxpayer," Sitharaman said.

Parliament, on August 12, 2025, passed a new Income Tax Bill to replace the six-decade-old Income Tax Act, 1961. It does not impose any new tax rate and only simplifies the language, which was required for understanding the complex Income Tax laws.

The Act has removed redundant provisions and archaic language and reduced the number of Sections from 819 in the Income Tax Act of 1961 to 536 and the number of chapters from 47 to 23.

The number of words had been reduced from 5.12 lakh to 2.6 lakh in the new Income Tax Bill, and for the first time, it introduces 39 new tables and 40 new formulas, replacing the dense text of the 1961 law to enhance clarity.

Sitharaman also asked tax officials to hold awareness sessions across India to educate people about the new tax laws in local languages.

"I want to convey a message to the Income Tax Department. You're not just tax collectors. You're the face of the government's relationship with the taxpayer. Since you're the face of the government's relationship with the taxpayer, this new law gives you a clearer and leaner framework to make it simple, to make it simpler for people who want to understand it better," she said.

It must be administered with empathy, fairness and efficiency, she said, adding that it is expected that every officer internalise the spirit of this new law.

"The taxpayer is not your adversary. The taxpayer is your partner in nation-building. I want a new approach, a new mindset. I urge Income Tax Officers to treat this "PRARAMBH" as an opportunity to embrace this fresh mindset...the atmosphere should change, and one should feel comfortable coming to an IT officer," she said.

Recalling the song from Hindi film Hum Hindustani to emphasise change in mindset, she said, 'Chhodo Kal Ki Baatein, Kal Ki Baat Purani; Aao Milkar Likhenge Hum Income Tax Ki Nayi Kahani'.

Drawing a similarity, she said the film was released in 1960 when the old Income Tax Act was being framed.

Stressing that the new law provides an opportunity to build trust, she urged the department to encourage less litigation.

"So, our underlying thought with a new Act should be that I trust the taxpayer. If I made it simple, there's no need for him to come to me. Everything runs digitally. I should have less temptation to take things to court.

"So, I would think it is necessary to build trust, reduce the need for litigation, use technology to minimise human interface, but never lose that humane touch. That should be the new Income Tax Act 2025. Make taxpayers' lives easy," she said.

Quoting Prime Minister Narendra Modi, she said, during the AI Summit, he spoke about M.A.N.A.V., a vision that he put forth to have a human-centric digital era.

M stands for Moral and Ethical Systems, A: Accountable Governance, N: National Sovereignty, A: Accessible and Inclusive AI, and V: Valid and Legitimate Systems.

"Income Tax Act, 2025 must be rooted in Moral and ethical systems. We need to strengthen and protect Fiscal National Sovereignty. And, of course, the reforms are not just data-driven; they are valid, legitimate systems that you're building in trust with the taxpayer," she said.

Sharing further details about the new law, she said the presumptive taxation scheme has been strengthened, which should provide a big relief to all the MSME units, because most often, they think it is complex, and therefore, they have to seek the assistance of a tax audit.

For home buyers, she said preconstruction interest on housing loans is now explicitly available for both self-occupied and let-out properties.

Sharing her six expectations from the tax department, Sitharaman said implement the Samwad sessions with sincerity, respect the time and effort of taxpayers and reduce litigations aggressively.

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"Every case that goes to a tribunal or a court is a failure of our system...a black mark on all of us," the minister said.

Besides, she urged the department to proactively engage with the youth of this country, use technology to arrest evasion and lastly, don't let this new Act meet the same fate as the old one.

"The Income Tax Act of 1961 started as a reasonably simple one, but year after year, provision after provision, exemption after exemption, it kept growing until it became 5.12 lakh words. We have now replaced it, thankfully.

"Ensure that there are ways in which you are able to do some things without complex amendments coming into it. This should continue to remain simple. You have had stakeholders and Parliament being very convinced that excellent work has been done in getting this simpler version of the Income Tax Act...Let the people not be disappointed," she added.

During the event, she launched the new, revamped website of the Income Tax Department.

She expressed her gratitude to the Select Committee of Parliament, which scrutinised the draft of the income tax legislation.

"They had done an extraordinary work, as much as you officers did, in making up this law. So, the committee recommended 196 different points, of which 184 were accepted," she said.

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