The Finance Minister, Mr P Chidambaram, on Tuesday promised a more taxpayer friendly income tax department in the coming years on the back of expectations that the newly created directorate on human resource development (HRD) in CBDT would within the next two years significantly transform the department from the point of view of the taxpayer.

The department will become more taxpayer friendly, more customer oriented and geared to collect direct taxes causing the least amount of inconvenience or hardship to the taxpayer. The department will increasingly focus on voluntary compliance and take steps to improve such compliance. Compliance has already improved remarkably in the last two years, Mr Chidambaram told reporters at North Block here today.

He announced that a new directorate on HRD has been created in the Central Board of Direct Taxes (CBDT) to develop, train and reorient the human resources in the tax department and accordingly help improve taxpayer services.

Mr Chidambaram said that the new directorate would be headed by a Director General of Income Tax (HRD) who will be an officer of the level of chief commissioner of Income Tax and will be located in New Delhi.

Direct taxes are taxes of the future. The CBDT must be reorganised and reengineered into a modern, efficient and well-equipped organisation. Its most important resource will be human resource and that resource must be carefully developed, trained and reoriented to meet the challenges of a growing economy, Mr Chidambaram said.

He highlighted that recent measures like tax return preparer scheme (launched to help small taxpayers comply with tax laws), facility of electronic payment of direct taxes, electronic filing of returns had a beneficial impact on revenue collections.

The Finance Minister said that the directorate would have three divisions of cadre management, performance management and training and capacity building.

The HRD directorate would develop and design strategic human resource plans, policies and processes aligned to the goal and vision of the income tax department for ensuring optimal resource mobilisation and delivery of taxpayer services.

It would assess and determine the job requirements, job profiles and skills needed for various jobs in the income tax department and make projections of human resource requirements. The directorate would also assist the Board in developing and implementing proper human resources development policies including those relating to recruitment, promotions, performance appraisals, transfers and succession plans.

A scientific scheme for linking of rewards to performance would also be designed. The Directorate would identify training needs, formulate training policies and facilitate skill enhancement. It would also foster international cooperation for incorporating administrative best practices in the field of tax administration, revenue department officials said.