Income Tax dept working on rules for new direct tax law: CBDT chief

The chairperson of the Central Board of Direct Taxes said the department is aligning its enforcement approach with a principle of "empathy", aiming to improve voluntary compliance

The Central Board of Direct Taxes (CBDT) chief on Thursday said that the Income Tax department has begun drafting rules, forms and procedures for the Income Tax Bill, 2025, PTI reported.

 

The bill, which seeks to replace the current income tax law, was tabled in Parliament in February and reviewed by a parliamentary panel that submitted its report to Parliament on 21 July, the report added.

 

Speaking at an event in Delhi, CBDT chairperson Ravi Agarwal said, “Work is already underway to give shape to its rules, forms and procedures - a critical next step. These will define how the law functions in practice. And I am confident that just like the bill, these too would reflect our shared commitment to clarity, simplicity and taxpayer convenience.”

 

He noted that the department is aligning its enforcement approach with a principle of “empathy”, aiming to improve voluntary compliance. “Rather than launching compliance measures at once, we are now enabling taxpayers to review and voluntarily update their filings. This is enforcement with empathy and it reflects the department’s evolving mindset to trust persons,” Agarwal was quoted as saying. 

 

The CBDT chief also highlighted the department’s increasing use of data analytics through its 'Nudge' initiative - short for “non-intrusive usage of data to guide and enable taxpayers” - which uses behavioural insights and transaction-level data to identify discrepancies in tax filings. The system focuses on issues such as under-reported income, incorrect deductions or suspicious claims.

 

In a separate interview with The Indian Express, Agarwal also stated that the department has started using artificial intelligence (AI) to monitor taxpayer behaviour. This includes tracking activity on online tax portals, identifying high-value transactions and filtering out PANs associated with suspicious claims. The long-term aim, he said, is to build a 360-degree view of individual financial activity and detect behavioural patterns that may indicate tax non-compliance.