Sitharaman outlines 5Rs of tax governance, stresses certainty & reforms

Union Finance Minister Nirmala Sitharaman on Friday unveiled the 5Rs of Responsive Tax Governance—Recognise, Respond, Redress, Reflect and Reform—while calling for greater tax certainty, lower litigation and a more taxpayer-centric administration to strengthen public trust and support India's economic growth, according to agency reports.
Addressing the 167th Income Tax Day celebrations organised by the Central Board of Direct Taxes (CBDT) in New Delhi, the Finance Minister said the Income Tax Department's role has evolved beyond revenue collection to creating a fair, efficient, transparent and citizen-friendly tax administration.Describing the implementation of the Income-tax Act, 2025 as a landmark reform, Sitharaman said the new law simplifies tax provisions, reduces compliance costs and enhances the ease of doing business. She also highlighted improvements in the e-Filing portal, faster processing of income tax returns, timely refunds and strengthened grievance redressal mechanisms.

Sitharaman outlines 5Rs of responsive tax governance, calls for greater tax certainty

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Emphasising the importance of responsive governance, Sitharaman said grievance redressal should not be limited to resolving individual complaints but should focus on identifying recurring issues and introducing systemic reforms to prevent their recurrence.She said honest taxpayers should find it easier to comply with tax laws, be given opportunities to correct genuine mistakes and interact with an administration that exercises its authority with fairness and humility.
Sitharaman also stressed the need to strengthen the Department's institutional capacity through modern infrastructure, wider technology adoption and continuous investment in human resources. She called for specialised capacity building in emerging areas such as artificial intelligence, data analytics, forensic accounting, international taxation, transfer pricing, digital assets, cybersecurity and leadership development.
Urging the Department to continue its reform journey, the Finance Minister said it should further simplify compliance procedures, encourage voluntary tax compliance, enhance tax certainty, responsibly leverage technology and reinforce taxpayer confidence while contributing to the vision of Viksit Bharat.
Revenue Secretary Arvind Shrivastava described the Income-tax Act, 2025, along with the new Income-tax Rules and Forms, as landmark reforms aimed at creating a simpler, clearer and more taxpayer-friendly tax system. He said technology-driven reforms must continue while ensuring taxpayers remain at the centre of policy implementation.
CBDT Chairman Ravi Agrawal highlighted the Department's progress in reducing tax litigation, expediting the disposal of appeals and improving tax certainty through Advance Pricing Agreements (APAs). He also noted significant improvements in return processing, refunds, grievance redressal and taxpayer outreach through initiatives such as PRARAMBH and Samvaad.Highlighting the Department's digital transformation, Agrawal said initiatives including PAN 2.0, Income Tax Business Application (ITBA) 2.0, IEC 3.0, Kar Saathi and the SAKSHAM NUDGE framework have simplified compliance, improved taxpayer services and promoted voluntary compliance.
During the event, Sitharaman released six flagship publications of the Income Tax Department, including the inaugural Annual Report of the Foreign Tax and Tax Research (FT&TR) Division, the Manual on Exchange of Information, updated guidance on FATCA and the Common Reporting Standard (CRS), India's first Guidance Note on Crypto Asset Reporting Obligations, the Annual Report of the Advance Pricing Agreement Programme, and Re-engineering Tax Governance, documenting the Department's transition towards a technology-driven, taxpayer-centric digital ecosystem.The celebrations also featured four short films showcasing the history of taxation, the Karmyogi Shiksha Path Portal, the Department's achievements during FY 2025-26 and initiatives to modernise taxpayer communication.