Advice of CBDT Chief Ravi Agarwal to Income Tax Officers
Ravi Agarwal, the newly appointed Chairman of the Central Board of Direct Taxes (CBDT), has urged income tax officials to adopt a prudent approach in their duties. This guidance, along with the review of the Income Tax Act, 1961, are top priorities for Agarwal as he completes his first month in office.
Emphasizing a PRUDENT Approach
During the recent Income Tax Day celebration, Agarwal introduced the PRUDENT framework to the officers, explaining each component in detail:
P – Professionalism:
Agarwal emphasized the need for a professional approach, advocating for capacity building, cutting through red tape, being sensitive, and outcome-oriented.
R – Responsiveness and Responsibility:
Officers should be responsive and responsible in their duties.
U – Understanding Laws, Transactions, and Business:
Understanding the economics of businesses, transactions, and the underlying laws is crucial for effective tax administration.
D – Data-Driven Decision:
Decisions should be based on data rather than assumptions or estimations.
E – Enforcement with Empathy:
While enforcement is necessary, it should be carried out with empathy, recognizing taxpayers as human beings.
N – Non-Intrusive Tax Administration:
A shift towards taxpayer-centric services and non-intrusive administration is essential to encourage compliance.
T – Technology Integration:
Embracing technology will improve tax administration systems and processes.
Review of the Income Tax Act, 1961
Agarwal has also prioritized the review of the Income Tax Act, 1961, as announced by Finance Minister Nirmala Sitharaman in the Union Budget 2024-25. An internal committee will undertake this review with the aim of simplifying the Act, reducing redundancies, and making it easier for taxpayers to understand.
“Taxpayers often find the Income Tax Act complicated,” Agarwal noted, stressing the need for the Act to be more readable and user-friendly. The review will be conducted in two phases: first, assessing the existing provisions for simplification and clarity; and second, diving into the granular details for comprehensive reform. The finance minister has set a six-month timeline for this review process.
Leadership Transition
Ravi Agarwal, who took charge as CBDT Chairman on July 1, will serve a one-year term until June 30, 2025. His leadership marks a significant step towards a more professional, responsive, and technology-driven tax administration, ensuring a fair and empathetic approach towards taxpayers.
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