FM Sitharaman asks I-T dept to crack down on tax evaders, ease compliance for honest taxpayers

Finance Minister Nirmala Sitharaman on Friday urged income tax officials to take firm action against tax evaders while ensuring convenience for honest taxpayers, stressing that a predictable tax regime is essential for economic growth.

Speaking at the 167th Income Tax Day celebrations in New Delhi, the minister also noted that the income tax department’s responsibility is no longer limited to “tax collection”. Instead, she said, its focus has expanded to ensuring fairness, efficiency, ease of doing business, and service, PTI reported.

“Over more than a century and a half, the I-T Department has evolved alongside India’s economic transformation, continuously adapting to meet the changing needs of the nation,” Sitharaman said.

She said the implementation of the Income-tax Act, 2025 has simplified the law by reorganising its provisions, reducing uncertainty and lowering compliance costs. The new tax framework came into force on April 1, 2026, replacing decades old Income-tax Act, 1961.

E-filing portal sees record usage during ITR season

Alongside this, she said, the e-filing portal has been significantly strengthened this tax filing season with expanded computing capacity, storage, bandwidth and also network infrastructure. The minister said these efforts enabled the portal to handle more than 1 crore taxpayer interactions in a single day, with daily interactions reached around 1.6 crore at peak.

During the AY 2026-27 (FY 2025-26) filing season till July 21, more than 3.2 crore income tax returns have been filed, nearly 94% of these filed ITRs have been verified, and 60 % have been processed.

She informed that over 1.3 crore refund claims have been received, 96% have been verified and 40% have been processed.

“… so the department must continue reducing processing timelines… Prompt refunds strengthen confidence in the fairness of the tax administration and improve liquidity for taxpayers,” she said.

Convenience for honest taxpayers, strict action against evaders

While appreciating the I-T department’s work, Sitharaman said, “We should not rest on our achievements, however high they might be”, and asked the department to focus on five priorities or 5Rs of a Responsive Tax Governance: ‘Recognise, Respond, Redress, Reflect and Reform’.

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

Sitharaman said the income tax department has to be discreet, and must be able to distinguish between taxpayers who are deliberately evading tax and those with bona fide errors. She added that the powers granted under tax laws should always be exercised with humility.

Calling taxpayers partners in India’s development, the finance minister said they should not be viewed merely as assessees. She also stressed the need to reduce tax-related litigation and strengthen certainty in the tax regime.

“Tax certainty is one of the strongest foundations of voluntary compliance. Our longterm objective must shift from ‘litigation management’ to ‘litigation prevention’,” she said.

Further, she said the implementation of the Income Tax Act, 2025 must be accompanied by consistent guidance and continuous engagement with taxpayers, professionals and industry.

This is important because India’s economy is evolving rapidly, and it will continue to generate new questions, and the department must remain agile enough to keep pace, she said.

“Ultimately, tax certainty is an economic imperative that improves the ease of doing business and strengthens India’s competitiveness as a global investment destination,” the minister said.