Tag: CBDT Chief

Income Tax Department Examines Taxpayer ITR Filing Patterns and Online Behavior, Says CBDT Chief

Income Tax Department Leverages AI for Enhanced Compliance

The Income Tax Department has intensified its monitoring and compliance efforts by leveraging artificial intelligence (AI) to track online taxpayer behavior and identify inconsistencies in tax returns, as reported by Indian Express. According to the Chairman of the Central Board of Direct Taxes (CBDT), Ravi Agrawal, the department is analyzing online activity, financial transactions, and return-filing patterns to encourage taxpayers towards better compliance.

Insights from the AIS Portal

One of the key insights comes from how frequently users access the Annual Information Statement (AIS) online. On average, taxpayers visited the AIS portal 3.5 times, resulting in a total of 24 crore visits. However, only 9 crore tax returns were filed last year, despite the generation of 40 crore AIS documents from over 650 crore financial transactions. The frequent access to the AIS without filing returns may indicate a taxpayer’s intent or difficulties in fulfilling their filing obligations. This understanding allows the department to intervene by offering assistance or prompting action through email or SMS.

AI Flags High-Value Transactions and Errors

The department employs AI-powered data analytics to flag high-value transactions where returns have not been filed, as well as cases of repeated errors in returns. The system identifies incorrect claims of exemptions and deductions, leading to the nationwide verification drive launched on July 14, 2025, across 150 locations. This operation specifically targeted fraudulent deductions and successfully identified over 1.5 lakh PANs linked to these practices. The CBDT asserts that many of these cases stem from misguidance by intermediaries rather than the taxpayers themselves.

Data-Driven Nudges Towards Compliance

Adopting a strategy of “nudging” taxpayers towards voluntary compliance, the department reached out to 19,501 taxpayers based on foreign asset data received through the automatic exchange of information. Consequently, 62% of these taxpayers updated their returns, revealing foreign assets valued at Rs 29,208 crore and foreign income of Rs 1,089 crore. Furthermore, excess claims under Section 80GGC amounting to Rs 9,000 crore were identified, leading to a reduction of claims by Rs 963 crore and facilitating additional tax payments of Rs 409.5 crore.

As of June 18, 2025, around 89 lakh updated returns had been filed, generating Rs 9,577.06 crore in additional tax revenue.

The Importance of Accurate Contact Details

While digital engagement is essential to the department’s compliance model, a significant challenge persists: the provision of incorrect or temporary contact details by taxpayers. Many email addresses belong to agents or intermediaries, which hampers the department’s ability to communicate directly with taxpayers. Chairman Agrawal emphasized the need for taxpayers to provide accurate email and mobile contact information to enhance communication and improve the effectiveness of taxpayer nudges.

The CBDT clarifies that these initiatives are not punitive but aimed at creating awareness and encouraging correct filing. With AI offering a comprehensive view of taxpayer transactions, the department seeks to increase return filings, close compliance gaps, and uphold the integrity of the tax system. As Agrawal aptly states, “We trust the taxpayer, but incorrect claims of exemptions and deductions are not acceptable.”

Big relief for the taxpayers! CBDT has launched an e-Dispute Resolution Scheme (e-DRS), check details here

Good news for taxpayers: CBDT launches online mechanism to address income tax disputes

Here comes a big relief for the taxpayers. The Central Board of Direct Taxes (CBDT) has launched an e-Dispute Resolution Scheme (e-DRS) to address litigation and provide relief to eligible taxpayers. It should be noted that the Section 245MA of the Income Tax Act also provides for the constitution of Dispute Resolution Committees (DRC).

What is e-DRS?

The CBDT said the e-DRS enables the taxpayers to file an application electronically for dispute resolution to the Dispute Resolution Committees (DRC) designated for the region of Principal Chief Commissioner of Income Tax having jurisdiction over the taxpayer. 

How does e-DRS function?

The CBDT said the taxpayer can opt for e-Dispute Resolution against the ‘specified order’ as defined in clause (b) of section 245MA of the Act, which includes an order in which the aggregate sum of variations proposed or made does not exceed Rs 10 lakh and returned income for the relevant assessment year does not exceed Rs 50 lakh. Moreover, such order should not be based on search/surveys or information received under an agreement referred to under section 90 or 90A of the Act.

As per the e-DRS, a DRC may make modification to the variations in the specified order and decide to grant reduction/waiver of penalty and prosecution in accordance with the provision of rule 44DAC of the Income-tax Rules, 1962. 

How to file application for e-DRS?

The taxpayers can file application for e-DRS in Form No. 34BC referred in rule 44DAB of the Rules, on the e-filing portal of the Income Tax Department, within one month from the date of receipt of specified order. If the appeal has already been filed and is pending before the Commissioner of Income-tax (Appeals), the application for e-DRS, is to be filed on or before September 30, 2024. if any specified order has been passed on or before August 31, 2024 and the time for filing appeal against such order before CIT (Appeals) has not lapsed, the application for dispute resolution can be filed on or before September 30, 2024.

Ravi Agarwal’s Advice to Income Tax Department: Insights from CBDT Chief

New CBDT Chairman Ravi Agarwal Advocates Prudent Approach for Income Tax Administration

The newly appointed chairman of the Central Board of Direct Taxes (CBDT), Ravi Agarwal, has emphasized the implementation of a prudent approach as a key priority for income tax officials. In a recent address during the Income Tax Day celebrations, Agarwal outlined the significance of adopting a PRUDENT approach, where each letter represents a fundamental aspect of tax administration.

Elaborating on the acronym PRUDENT, Agarwal emphasized the following principles:

  • P for Professionalism: Emphasizing the importance of a professional and capacity-building approach to cut through red tape and achieve outcome-oriented results.
  • R for Responsiveness and Responsibility: Stressing the need for officers to be responsive and responsible in their duties.
  • U for Understanding Laws and Business Transactions: Encouraging officers to delve deep into understanding the economic aspects of businesses and the underlying laws and transactions.
  • D for Data-based Decision Making: Advocating for data-driven decision making rather than relying on surmises and conjectures.
  • E for Enforcement with Empathy: Highlighting the importance of carrying out enforcement actions with empathy towards taxpayers.
  • N for Non-intrusive Tax Administration: Emphasizing the shift towards a taxpayer-centric and non-intrusive tax administration approach to enhance compliance.
  • T for Technology Integration: Advocating for the enhanced integration of technology into tax administration processes to improve systems and overall tax administration.

Additionally, Agarwal underscored the importance of reviewing the Income Tax Act, 1961, as another key priority. He expressed the need to simplify the language and presentation of the Act to make it more comprehensible for taxpayers, in line with Finance Minister Nirmala Sitharaman’s announcement in the Union Budget 2024-25. Agarwal highlighted the intention to streamline provisions, eliminate redundancies, and present the Act in a more accessible format for taxpayers.

Notably, Agarwal’s term as CBDT Chairman extends until June 30, 2025, during which he aims to bring about these key reforms. The comprehensive review of the Income Tax Act over the next six months, as proposed by the Finance Minister, aligns with the commitment to make tax laws more user-friendly and conducive to compliance. This strategic approach under Agarwal’s leadership signifies a significant shift towards a more transparent, empathetic, and technology-integrated income tax administration in the country.