Taxpayer's Charter under the Income Tax Act 2025: What Section 240 Says
Section 240 of the Income-tax Act, 2025 is a single sentence. It requires the Board (the Central Board of Direct Taxes) to adopt and declare a Taxpayer's Charter, and lets it issue orders, instructions, directions or guidelines to other income-tax authorities to administer that Charter. It applies to the tax department, not to taxpayers, and the Act itself does not list what the Charter contains. Law as amended by the Finance Act, 2026, effective 1 April 2026 (tax year 2026-27).
What does section 240 of the Income Tax Act 2025 say?
Section 240, headed "Taxpayer's Charter", says the Board shall adopt and declare a Taxpayer's Charter and issue such orders, instructions, directions or guidelines to other income-tax authorities as it considers fit for the administration of such Charter.
It does two things:
- A duty. The word is "shall". The Board must adopt the Charter and declare it.
- A power. The Board may issue orders, instructions, directions or guidelines to the other authorities so the Charter is actually followed.
Who is the "Board", and who are the "other income-tax authorities"?
Section 2(18) defines the Board as the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963. Section 236 lists the classes of income-tax authorities. The Board is the first class. The rest run from Principal Directors General and Principal Chief Commissioners down through Commissioners, Commissioners (Appeals), Deputy and Assistant Commissioners, Income-tax Officers, Tax Recovery Officers and Inspectors of Income-tax.
What does section 240 not tell you?
| Question | What the Act text says |
|---|---|
| What rights or commitments are in the Charter? | Section 240 does not list them. They are in the Charter the Board declares, so read that document. |
| Who must follow it? | The Board adopts it and issues directions to "other income-tax authorities" for its administration. |
| Is there a separate penalty or refund if it is breached? | Section 240 provides none. |
| Does it change a tax rate, deadline or deduction? | No. It contains no rate, date or limit. |
Treat the Charter as an administrative standard on how the department deals with you. It sits beside, and does not replace, the remedies in the Act, such as appeals and refund claims.
How does it connect to the Board's other powers?
Section 239(1) separately lets the Board issue orders, instructions and directions to other income-tax authorities for the proper administration of the Act, and requires those authorities and others employed in executing the Act to observe and follow them. Section 239(2) bars directions that tell an officer to make a particular assessment or dispose of a case in a particular manner, or that interfere with the discretion of the Joint Commissioner (Appeals) or Commissioner (Appeals) in appellate work.
Section 239(3)(b) lets the Board, to avoid genuine hardship, authorise an income-tax authority (other than a Joint Commissioner (Appeals) or Commissioner (Appeals)) to admit a late application or claim for an exemption, deduction, refund or other relief and decide it on merits. That is a relief power in a different section, not part of the Charter.
Examples: how the Charter matters in practice
Example 1: Meena, a salaried taxpayer
Meena believes her refund query has been handled poorly. She first reads the Charter as declared by the Board, to see whether the commitment she has in mind is actually in it. She does not rely on a general impression of what a charter "usually" promises. If her real problem is a wrongly denied refund, the Act's own routes apply. See refund claims, limitation and interest and appeals.
Example 2: Ravi, a small trader who missed a claim date
Ravi filed a deduction claim after the time allowed. The Charter is not the tool here. The relevant provision is section 239(3)(b), under which the Board may by general or special order authorise an authority to admit a late claim where it considers that genuine hardship needs avoiding. Whether such an order covers Ravi's case depends on the order, which his adviser needs to find and read.
A compliance walk-through for a CA firm
- Download the Charter as currently declared by the Board and file it with the client-service procedures.
- When a client complains about department conduct, check the complaint against the Charter text first.
- Track Board orders, instructions and guidelines issued under sections 239 and 240. They are the source of how officers are told to behave.
- Keep a dated record of each interaction (notice date, reply date, acknowledgement) so a complaint rests on facts.
Common mistakes
- Quoting Charter commitments from memory. Section 240 does not list any. Quote the declared document.
- Treating it as a remedy. Section 240 gives no refund, penalty waiver or appeal right of its own.
- Mixing it up with section 239. Hardship relief and late-claim powers are in section 239(3), not section 240.
- Assuming it limits tax liability. It has no rate, due date or deduction.
- Assuming the 1961 Act wording carries over. Check the declared Charter and the 2025 Act text directly.
Where this is in the Act
- Section 240: Taxpayer's Charter
- Section 2(18): definition of "Board"
- Section 236: classes of income-tax authorities
- Section 239: Board's orders, instructions and directions to subordinate authorities
How can a CA firm keep up with administrative changes?
The hard part for a practice is knowing which client files have a pending notice, a reply date or an open grievance. Finexo's practice management software keeps those dates and tasks for every client in one place. It does not track departmental circulars or file anything on your behalf.
This article explains the Income-tax Act, 2025 (as amended by the Finance Act, 2026). It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.
Frequently Asked Questions
What is the Taxpayer's Charter under the Income Tax Act 2025?
Section 240 requires the Board (CBDT) to adopt and declare a Taxpayer's Charter. It may issue orders, instructions, directions or guidelines to other income-tax authorities to administer it.
Does section 240 list the rights in the Charter?
No. The section only requires the Board to adopt and declare the Charter. The commitments are in the Charter the Board declares.
Who has to follow the Taxpayer's Charter?
Section 240 lets the Board issue orders, instructions, directions or guidelines to other income-tax authorities for administering the Charter. Section 236 lists those authorities.
Can I get a refund or penalty waiver under section 240?
Section 240 provides no refund, waiver or appeal right. Use the Act's other provisions, such as refund claims and appeals, for those remedies.
Where does the Board's power to condone late claims sit?
In section 239(3)(b), not section 240. The Board may, to avoid genuine hardship, authorise an authority to admit a late application or claim and decide it on merits.