I-T Department Guarantees Strict Data Confidentiality
The Income Tax Department is reinforcing its commitment to taxpayer confidentiality, according to CBDT Chairman Ravi Agrawal. In a recent interview, Agrawal emphasized that the new Income Tax Bill, set for 2025, aims to modernize existing laws to better align with the digital landscape. He assured that the department’s powers to access digital devices during investigations are not new but are simply being updated to reflect current technological realities. The chairman also highlighted the department’s focus on building taxpayer trust while ensuring compliance and integrity in tax administration.
Modernizing Tax Laws for Clarity
The upcoming Income Tax Bill is designed to simplify tax laws, making them more accessible for the average taxpayer. Agrawal noted that the changes will reduce the reliance on professionals to interpret complex legal language. By incorporating formulae and tables, the bill aims to streamline compliance processes for both taxpayers and tax professionals. This modernization effort is expected to enhance understanding and ease of use, allowing individuals to navigate their tax obligations more effectively.
Ensuring Data Privacy Amid Increased Access
With the bill granting the tax department access to vast amounts of data, including social media accounts for investigative purposes, concerns about privacy have arisen. Agrawal clarified that these powers are not intended to infringe on the privacy of ordinary taxpayers. The provisions outlined in the new bill merely reiterate existing powers under the Income Tax Act of 1961, specifically during search and survey operations. He emphasized that stringent internal controls are in place to protect taxpayer data, with access strictly regulated and monitored. The department follows a “need-to-know” principle, ensuring that only authorized personnel can access sensitive information.
Building Trust with Taxpayers
The CBDT is committed to fostering a trusting relationship with taxpayers, adhering to a “Trust First and Scrutinize Later” philosophy. Agrawal stated that the department recognizes the majority of taxpayers are honest and prefers to address minor discrepancies through gentle reminders rather than intrusive measures. Intrusive actions will only be taken in cases where there is credible evidence of significant tax evasion or illicit activities. The goal is to create a deterrent for willful defaulters while assuring honest taxpayers that they will not be unfairly targeted.
Leveraging Technology for Efficiency
The Income Tax Department is increasingly utilizing technology to enhance operational efficiency, particularly in processing refunds. Agrawal highlighted that the automation of income tax return processing has significantly reduced the average refund time from 93 days in 2013-14 to just 17 days in 2024-25. This improvement has bolstered taxpayer confidence in the system. Additionally, the department is exploring the use of artificial intelligence and machine learning to detect tax evasion tactics, such as shell companies and black money transactions. Upcoming initiatives, like Insight 2.0, aim to expand the application of AI in various areas, including fraud detection and predictive modeling.
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