Section 240 of the Income-tax Act, 2025 — Taxpayer's Charter

In plain language

What Section 240 actually says

Section 240 of the Income-tax Act, 2025 is short but powerful. In plain words it provides that the Central Board of Direct Taxes (CBDT / "the Board") shall adopt and declare a Taxpayer's Charter, and shall issue such orders, instructions, directions or guidelines to other income-tax authorities as it considers fit for the administration of that Charter.

This is the 2025 Act's re-enactment of the old Section 119A of the Income-tax Act, 1961 (which was inserted by the Finance Act, 2020 and under which the Charter was notified in August 2020). The wording is substantially the same, so the Charter continues seamlessly under the new law that is effective from 1 April 2026.

What is the Taxpayer's Charter?

The Charter is a formal document that lists, on one side, the commitments the Income-tax Department makes to you, and on the other side, the things the Department expects from you. Its aim is to move Indian tax administration from an adversarial, power-based approach towards a trust-based, rights-based relationship.

• 14 commitments the Department makes to the taxpayer.
• 6 expectations the Department has from the taxpayer.

The Department's key commitments to you

• Fair, courteous and reasonable treatment by officers.
• Treat you as honest unless there is a reason to believe otherwise (presumption of honesty).
• Fair and impartial appeal and review mechanism.
• Complete and accurate information to help you meet your obligations.
• Timely decisions in every income-tax proceeding within the time limits under law.
• Collect the correct amount of tax due — no more, no less.
• Respect your privacy and follow due process; enquiry/examination only to the extent required.
• Maintain confidentiality of the information you provide.
• Hold its authorities accountable for their actions.
• Allow you a representative of your choice.
• Provide a mechanism to lodge complaints and have them addressed.
• Provide a fair and just system to resolve tax issues.
• Publish service standards and report periodically.
• Reduce the cost of compliance.

What the Department expects from you

• Be honest and compliant — disclose full and correct information.
• Be informed of your obligations under the law.
• Keep accurate records as required.
• Know what your representative does on your behalf.
• Respond in time to notices and communications.
• Pay your dues in time.

Who it applies to

Section 240 binds the CBDT and all income-tax authorities. The Charter itself benefits every taxpayer — salaried individuals, professionals, businesses, companies, trusts and non-residents alike. You do not have to apply for its protection; it applies automatically to every interaction you have with the Department, whether it is a refund, a scrutiny assessment, a rectification or an appeal.

Practical implications and how to use it

The Charter is a declaration of standards rather than a schedule of penalties. It does not, by itself, impose a fine on an officer or automatically compensate you if a commitment is breached. However, because the obligation now sits inside the statute, taxpayers have argued before High Courts (using writ jurisdiction under Article 226 of the Constitution) that breaches — such as unreasonable delay in refunds or denial of a fair hearing — violate statutory expectations. In day-to-day practice you can invoke the Charter when you:

• Face inordinate delay in a refund or in giving effect to an appellate order.
• Are denied the right to be heard or to appoint a representative.
• Experience discourteous conduct or a fishing enquiry beyond what the law permits.

Grievances are routed through e-Nivaran on the e-filing portal and CPGRAMS, and the CBDT's annual action plans mandate time-bound disposal of grievances, faster refunds and timely appeal effects — the administrative machinery that gives the Charter teeth.