'Tax notices need to be simplified...': FM Nirmala Sitharaman on 165th year of Income Tax

Union Finance Minister Nirmala Sitharaman on Wednesday noted that the income tax notices need to be simplified so that it can be easily followed by common people. Speaking at the 165th year of Income Tax, FM Sitharaman first congratulated taxpayers for immensely contributing to the Indian economy and said the need for the language of income tax notices and letters issued to the public to be simplified. 

“Tax notices need to be simplified so that people understand them better. Can we explore issuing simple, easy-to-understand notices?”FM Sitharaman asked.

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Moreover, the FM asked income tax department to refrain from using “threatening language” in tax notices.

“Let the experience of filing tax return on the first day be as good as filing it on the last day. We have to ensure that threatening language in tax notices and messages is avoided,” said FM Sitharaman.

She said that PM Narendra Modi wants a “simple system” and asked the Income Tax department to approach the tax paying public with more transparency and less intimidation.

“Prime Minister Narendra Modi had been very clear from the beginning that we need to provide a simple system,” the FM noted.

“Three goals — seamless, painless and faceless — will be kept in mind, as mentioned previously by PM Modi,” the finance minister said, pressing that she would progress on the four steps she had mentioned during Budget 2024.

She further added that this year, the country recorded a net addition of 58.57 lakh first-time tax filers this year.

She hailed the feat achieved by tax officers with this collection and revealed that they had to face challenges in the last ten years to reach this target.

“The last ten years were full of challenges for India and tax officers. The collective effort of the tax-payers and income tax officials have led to the highest ever income tax collection,” Sitharaman said.

The Finance minister further added that 72 per cent of all tax payers have moved to the new tax systems. She called the new tax regime simple and listed its advantages.

“Second tax regime is simple, no exemptions and headaches. 72 per cent of all tax payers have moved to new tax systems,” she said.

Earlier this month, the Income-tax Department said record income tax returns (ITRs) were filed till the last day on July 31, 2024. It noted that the total number of ITRs for AY 2024-25 filed till 31st July, 2024, was more than 7.28 crore, which is 7.5% more than the total ITRs for AY 2023-24 (6.77 crore) filed till 31st July, 2023. 

"The filing of ITRs peaked on 31st July, 2024 (due date for salaried taxpayers and other non-tax audit cases) with over 69.92 lakh ITRs being filed on a single day i.e. on 31st July, 2024.  The e-filing portal also observed its highest per hour rate of 5.07 lakh of ITR filing between 07 pm to 08 pm on 31.07.2024. The highest per second rate of ITR filing was917 (17.07.2024, 08:13:54 am) and the highest per minute rate of ITR filing was 9,367 (31.07.2024, 08:08 pm)," the Income Tax department stated in its note.

It further said that an increasing number of taxpayers have opted for the New Tax Regime this year. Of the total ITRs of 7.28 crore filed for AY 2024-25, 5.27 crore have been filed in the New Tax Regime compared to 2.01 crore ITRs filed in the Old Tax Regime. About 72% of taxpayers have opted for the New Tax Regime, while 28% continue to be in the Old Tax Regime.

Of the 7.28 crore ITRs filed for A.Y. 2024-25, 45.77% of ITRs are ITR-1 (3.34 crore), 14.93% are ITR-2 (1.09 crore), 12.50% are ITR-3 (91.10 lakh), 25.77% are ITR-4 (1.88 crore) and 1.03% are ITR-5 to ITR-7 (7.48 lakh).