As February 1, 2025, approaches, Finance Minister Nirmala Sitharaman is preparing to present her seventh Union Budget, while the Central Board of Direct Taxes (CBDT) sets its sights on a significant achievement: reaching ₹22 lakh crore in direct tax collections. Taxpayers, particularly those with undisclosed foreign assets, should be vigilant as the Income Tax Department ramps up its compliance efforts.
In an exclusive interview with CNBC-TV18, CBDT Chairman Ravi Agarwal outlined the department’s approach to give taxpayers a special opportunity to disclose foreign assets and amend their returns. This window for compliance is open until December 31, enabling taxpayers to correct any potential non-disclosure before enforcement actions may commence.
“It’s an inclusive approach from the department, wherein we are not issuing notices but rather informing taxpayers that we have information and encouraging them to comply. We believe some may have overlooked their obligations due to unfamiliarity with the provisions of the act. By bringing these provisions to their attention, we hope they will take the necessary action. The opportunity remains available until December 31, providing ample time for taxpayers to respond appropriately,” he explained.
As of November 10, India’s net direct tax collections reached ₹12.11 lakh crore, marking a 15.41% increase compared to the previous year. This growth, fueled by higher contributions from both corporate and individual taxpayers, brings the government closer to its ambitious direct tax collection goal of ₹22.12 lakh crore for FY24.
Corporate tax collections reached ₹5.10 lakh crore, while non-corporate taxes, including personal income tax from individuals and Hindu Undivided Families (HUFs), contributed ₹6.62 lakh crore. Furthermore, Securities Transaction Tax (STT) collections have nearly doubled to ₹35,923 crore. Gross tax collections rose by 21.20% year-on-year to ₹15.02 lakh crore, with refunds amounting to ₹2.92 lakh crore, reflecting the government’s efforts to streamline processes.
“We are very optimistic about the current trends in tax collection. I am confident that we will not only meet but surpass our targets,” Agarwal stated. He attributed the robust revenue momentum to strong economic activity, which has enhanced corporate earnings and market performance.
One of the most eagerly awaited aspects of the upcoming budget is the proposed simplification of direct tax laws. When asked about the potential details of this simplification, especially as it marks the third attempt in the past decade, Agarwal noted that previous efforts had not received much traction and had been labeled as unsuccessful by experts.
“This is an ongoing process. We have incorporated recommendations from prior efforts into the Tax Act when appropriate. We are making a concerted effort this time and are hopeful of meeting both government and taxpayer expectations,” he remarked.
Regarding whether changes in tax rates would be included in the simplification, Agarwal refrained from commenting, instead emphasizing a focus on easing compliance. “We are working to identify areas for simplification—using straightforward language and simpler processes; that is our primary goal,” he added.