Central Board of Direct Taxes

The Central Board of Direct Taxes, or CBDT, is the statutory body that heads India’s direct-tax administration, constituted under Section 3(1) of the Central Boards of Revenue Act, 1963 and sitting in the Department of Revenue in the Ministry of Finance. It frames direct-tax policy, makes the rules and issues the instructions under the direct-tax laws, and commands the Income Tax Department that assesses and collects the tax. The principal statute it administers is the Income-tax Act, 2025, which came into force on 1 April 2026 in place of the Income-tax Act, 1961.

The Board is a seven-person body at the top of a department of tens of thousands. It has a Chairman and six Members, all serving officers of the Indian Revenue Service at the apex level, and it is the cadre-controlling authority for that service. Every posting, promotion and jurisdiction order that shapes a career from Income Tax Inspector upward runs from the Board or from the field formations it supervises.

For a central government employee outside the department, the Board matters for a different reason: it is the authority whose circulars decide how the salary and pension provisions of the Income-tax Act are applied to a pay slip, and whose Rules prescribe the forms on which a claim is made. A Form 16, a standard-deduction claim and a tax regime election all run on Board-prescribed machinery.

This page sets out what the Board does, its statutory basis and the 1963 split that created it, its composition and how it is appointed, its powers under the Income-tax Act, 2025, the limits of a circular, the field hierarchy from Principal Chief Commissioner at Level 17 down to Tax Assistant at Level 4, the specialised directorates, and the pay of the departmental ranks. For the pay at each rung, see the salary by pay level chart.

What the Board does

The Central Board of Direct Taxes has two jobs, one legislative and one administrative, and confusing them is the commonest error about it. On the legislative side it provides the direct-tax policy inputs for the Union Budget, drafts the direct-tax legislation, and makes the subordinate rules and forms under the Income-tax Act, 2025. On the administrative side it heads the Income Tax Department, sets the jurisdiction of the assessing authorities, distributes the collection target across the field formations, and supervises the zones through its Members.

It does not assess a taxpayer, and it does not decide an appeal. Assessment is the work of the field formations, from the Income Tax Officer at Level 8 up to the Commissioners, and an appeal from an assessment goes to the Commissioner (Appeals), the Income Tax Appellate Tribunal and the courts. The Board sits above that chain and directs it in general terms.

Section 5(3) of the Central Boards of Revenue Act, 1963 fixes the boundary of the Board’s remit in the statute itself: every function that any enactment entrusted to the old Central Board of Revenue is discharged by the Central Board of Direct Taxes if it relates to direct taxes, and by the indirect-tax board otherwise. The direct-tax laws named in Section 2(c) of that Act run well beyond income tax. They include the Wealth-tax Act, 1957, the Gift-tax Act, 1958, the Estate Duty Act, 1953 and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which was added to the list with effect from 1 April 2016. Most of those statutes are spent or repealed as charging provisions, but the black-money legislation is live and is administered by the Board through the same field machinery.

Statutory basis and the 1963 split

The CBDT rests on an Act of Parliament, which separates it from a body such as the Staff Selection Commission that rests on an executive resolution. That distinction is not decorative. A statutory body cannot be reconstituted or abolished by an executive order, and the powers a taxing statute confers on the Board are conferred on a body Parliament created.

The constituting statute is the Central Boards of Revenue Act, 1963 (Act 54 of 1963), assented on 30 December 1963 and brought into force on 1 January 1964 by Notification No. S.O. 3606 dated 30 December 1963. Its title uses the plural because it created two boards out of one. Until 1 January 1964 a single Central Board of Revenue, constituted under the Central Board of Revenue Act, 1924, had handled direct and indirect taxes together. Section 3(1) of the 1963 Act replaced it with the Central Board of Direct Taxes and a second board for indirect taxes, each subject to the control of the Central Government and each exercising the powers entrusted to it by the Central Government or by law.

The indirect-tax board was called the Central Board of Excise and Customs for its first fifty-four years. Section 160 of the Finance Act, 2018 (Act 13 of 2018) renamed it the Central Board of Indirect Taxes and Customs with effect from 29 March 2018, when the Goods and Services Tax reshaped the indirect-tax administration, and the amendment reached into the text of the 1963 Act itself. The direct-tax board has kept its name and its remit since 1964. Both remain under the Department of Revenue, so the Ministry of Finance oversees direct and indirect taxes through two parallel statutory boards created by one section of one Act.

Composition and appointment

The Board consists of a Chairman and six Members, and the seven-member figure is a statutory ceiling rather than a fixed size. Section 3(2) of the Central Boards of Revenue Act, 1963 provides that each Board shall consist of such number of persons not exceeding seven as the Central Government may think fit to appoint. The ceiling stood at five when the Act was passed and was raised to seven with effect from 21 June 1978, and the Central Government may appoint fewer, which is why a Board running with a vacancy is lawfully constituted.

The Chairman and the Members are ex-officio Special Secretaries to the Government of India. The Members were of Additional Secretary rank until November 2008, when the posts on both revenue boards were upgraded to Special Secretary. All seven are drawn from the senior-most ranks of the Indian Revenue Service (Income Tax), and appointment is made by the Appointments Committee of the Cabinet.

Tenure at the top of the Board is short and frequently extended on contract past the age of superannuation, which is the practical consequence of appointing from a cadre whose senior-most officers are already close to 60. Ravi Agrawal, a 1988-batch officer, took charge as Chairman in June 2024 for an initial term of one year and was reappointed by the Appointments Committee of the Cabinet with effect from 1 July 2026, the day after his scheduled retirement, for a term running to 31 December 2026 or until further orders, whichever is earlier.

Work is divided by portfolio. The standard set covers income tax and revenue, legislation, administration and taxpayer services, investigation, audit and judicial matters, and systems, and the allocation is reassigned from time to time. Each Member also supervises a group of field zones. Only fundamental issues are reserved for the full Board acting together, and Section 4(1) of the 1963 Act empowers the Central Government to make rules regulating the transaction of business, under which an order made or an act done in accordance with those rules is deemed to be the order or act of the Board. That deeming provision is what allows a single Member to act with the Board’s authority, and it is why the Board functions as a set of portfolio heads rather than a standing committee that must meet to decide anything.

Powers under the Income-tax Act 2025

The Board’s operative powers over the department come from Sections 236 to 245 of the Income-tax Act, 2025, which replaced the Income-tax Act, 1961 on 1 April 2026 and renumbered the provisions without disturbing the Board’s position. Section 236 lists the income-tax authorities and puts the Central Board of Direct Taxes, constituted under the Central Boards of Revenue Act, 1963, at the top of that list. Section 237 lets the Central Government authorise the Board to appoint income-tax authorities below the rank of Deputy Commissioner or Assistant Commissioner. Section 238 lets the Board declare, by notification, which authority is subordinate to which.

Section 239 is the provision the department runs on. It empowers the Board to issue such orders, instructions and directions to other income-tax authorities as it considers fit for the proper administration of the Act, and it obliges those authorities and every person employed in the execution of the Act to observe and follow them. It is the successor to Section 119 of the 1961 Act, and it carries forward the relieving power that lets the Board authorise an income-tax authority to admit a claim for exemption, deduction, refund or other relief after the statutory time limit has expired, which is how a condonation of delay is granted.

Two further provisions matter to a taxpayer. Section 240, the successor to Section 119A of the 1961 Act, requires the Board to adopt and declare a Taxpayers’ Charter and to issue the instructions needed to administer it. Section 245 gives statutory footing to the faceless jurisdiction of income-tax authorities, so the faceless assessment machinery that once rested on scheme notifications now sits in the Act itself, alongside the provisions that create the authorities operating it.

Circulars and what they bind

A Board circular binds the officers of the Income Tax Department and does not bind the taxpayer or the courts. That asymmetry is the single most useful thing to know about the instrument, and it works in the taxpayer’s favour. Because Section 239 of the Income-tax Act, 2025 obliges every income-tax authority to follow the Board’s instructions, a circular that grants a concession can be enforced against the department by a taxpayer who wants it, and the Supreme Court so held in UCO Bank v. Commissioner of Income Tax (1999) 237 ITR 889. A circular that would impose a burden the statute does not impose has no such force, because the taxpayer is assessed on the Act.

The outer limit was fixed by a Constitution Bench. In Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries, decided on 14 October 2008, the Supreme Court held that a circular contrary to a statutory provision has really no existence in law, and that once the Supreme Court or a High Court has declared the law on a question, the courts will give effect to that declaration rather than to a departmental circular that says otherwise. A circular is therefore an administrative instruction that governs the department’s conduct, not a source of law.

The practical effect is a two-speed system. A change in the Board’s reading of a provision reaches every charge in the country at once through a circular, which is why the department moves uniformly on an interpretation without waiting for litigation. A disputed assessment is still settled by the appellate authorities and the courts on the statute, which is why a circular the Board later withdraws does not retrospectively unsettle an assessment made under the Act. The Board also uses the same power to fix the monetary and territorial jurisdiction of the assessing authorities, which is how the line between an Income Tax Officer and an Assistant Commissioner is drawn on a live file.

Rule-making and the Income-tax Rules 2026

The Board makes the Income-tax Rules, subject to the control of the Central Government, under Section 533 of the Income-tax Act, 2025. It exercised that power to notify the Income-tax Rules, 2026 by Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026, replacing the Income-tax Rules, 1962 with effect from 1 April 2026. The 2026 Rules run to 333 rules and 190 forms, against 511 rules and 399 forms under the 1962 Rules, a reduction that tracks the compression of the statute itself from 819 sections to 536.

Rule-making is where the Board touches a salaried employee most directly, because the machinery of a salary claim is rule-level and form-level rather than section-level. The return forms, the Form 16 certificate a drawing and disbursing officer issues, the Form 26AS statement, the Form 10-IEA used to opt out of the default regime, and the prescribed-allowance conditions that decide whether an allowance is exempt are all Board instruments. The exemptions themselves moved into the Table in Schedule III to the Income-tax Act, 2025, read with the 2026 Rules, which is why an allowance article on this site cites the Schedule and the Rules together rather than the old Rule 2BB.

The Board also drafted the replacement statute. An internal committee under a Chief Commissioner of Income Tax, with 22 sub-committees, was set up in August 2024 to review the Income-tax Act, 1961 after the Union Budget of July 2024 announced a comprehensive review to be completed in six months. The Board invited public suggestions on the e-filing portal under four heads: simplification of language, litigation reduction, compliance reduction, and redundant or obsolete provisions. The Income-tax Bill, 2025 was introduced in the Lok Sabha on 13 February 2025, and the Income-tax Act, 2025 received assent on 21 August 2025.

The field hierarchy it heads

Below the Board runs the Income Tax Department, a hierarchy that descends through eleven ranks and ten pay matrix levels, from the apex Level 17 to Level 4.

Levels 17 and 18 carry a single fixed cell and no annual increment, so an officer who reaches Principal Chief Commissioner draws Rs. 2,25,000 of basic pay for the rest of their service.

The chain decides how a career runs. The Group A Indian Revenue Service enters at Assistant Commissioner, Level 10, through the UPSC Civil Services Examination or by promotion from the departmental cadre. The Group B cadre enters below, as an Income Tax Inspector at Level 7 through SSC CGL, rises to Income Tax Officer at Level 8 on a departmental examination and seniority, and can cross into the Group A service at Assistant Commissioner. The SSC CGL salary page sets out the pay of the entry grades and the salary by pay level chart the pay at each rung of the climb.

The directorates

Alongside the territorial hierarchy that assesses taxpayers by region, the Board runs a set of directorates for work that cuts across the territorial charges, each headed by a Director General or Principal Director General.

The Investigation directorate conducts search, survey and enquiry into tax evasion. The Intelligence and Criminal Investigation directorate gathers and analyses financial intelligence. The Systems directorate runs the department’s technology, including the e-filing portal, the Central Processing Centre and the faceless-assessment platforms that Section 245 of the Income-tax Act, 2025 now underpins. The TDS directorate oversees tax deducted at source, which is the channel through which nearly all central government salary tax is collected. The international-taxation and transfer-pricing wings handle cross-border taxation, and the Legal and Research directorate supports the Board’s litigation.

A posting to a directorate is a normal part of a departmental career rather than a separate track. An Income Tax Inspector or an officer of any rank may be posted to one for a spell and return to a territorial charge afterwards, on the same pay level and the same seniority in the cadre.

Cadre control over the Indian Revenue Service

The Central Board of Direct Taxes is the cadre-controlling authority for the Indian Revenue Service (Income Tax), the Group A service that staffs the Income Tax Department from Assistant Commissioner at Level 10 upward. Cadre control means the Board settles the sanctioned strength of the service, requisitions the annual intake from the UPSC, allots officers to charges, runs the departmental promotion committee process for promotion to each higher grade, and decides deputation out of the service.

The Group B cadres below, the Income Tax Officers at Level 8 and the Income Tax Inspectors at Level 7, are managed within the department under the Board’s supervision, with seniority maintained charge-wise rather than on an all-India list. That is the reason two Inspectors recruited in the same SSC CGL year to different charges can reach Income Tax Officer several years apart.

The Central Board of Indirect Taxes and Customs performs the identical function for the IRS (Customs and Indirect Taxes) branch. The two branches are separate cadres with separate seniority and separate promotion prospects, which is why an aspirant’s service allocation at the UPSC stage decides which board will control the rest of their career.

Pay in the department

Every rank in the Income Tax Department is paid on the standard central government pattern set by its pay matrix level, and the Board sets no separate pay scale of its own. The build is the entry basic for the level, plus dearness allowance at 60% of basic pay from 1 January 2026, plus house rent allowance at 30%, 20% or 10% of basic by city class, plus transport allowance, less the National Pension System contribution, the health-scheme subscription and income tax.

A Level 7 Inspector draws an in-hand of about Rs. 83,000 a month in an X-class city, a Level 8 Officer about Rs. 88,000, and a Level 10 Assistant Commissioner about Rs. 1,01,000. Income tax at the Inspector and Officer levels is nil under the default new regime, because the annual income after the Rs. 75,000 standard deduction stays below the Rs. 12,00,000 ceiling for the full rebate. The income tax inspector salary and SSC CGL salary pages set out the entry grades in detail, and the 7th CPC salary calculator computes the take-home for a chosen level and city.

The CBDT compared with the CBIC

Both boards were created by the same section of the same Act on the same day and sit in the same department, which is why the differences between them are worth stating precisely rather than by analogy.

The Goods and Services Tax adds an asymmetry the table cannot show. Indirect tax is administered jointly with the states through the GST Council, so the CBIC shares its subject with thirty-odd state administrations. Direct tax is exclusively a Union subject under Entry 82 of the Union List, so the CBDT administers income tax alone.

Collection targets and the Central Action Plan

The Board translates the Budget’s revenue estimate into a work programme through an annual Central Action Plan, which distributes the collection target across the field formations and sets the year’s priorities for assessment, recovery, litigation and taxpayer services. The direct-tax collection target for the financial year 2026-27 is Rs. 26.97 lakh crore: Rs. 12.31 lakh crore of corporation tax, Rs. 13.92 lakh crore of taxes on income, and Rs. 73,700 crore of securities transaction tax.

The Central Action Plan 2026-27, released on 13 May 2026, is the first written against the Income-tax Act, 2025. It is organised around an acronym the Board calls PRUDENT: professionalism and probity, responsibility and responsiveness, understanding of law, business and economy, data-driven decision-making, enforcement with empathy, non-intrusive administration, and technology-driven processes. Its operational priorities are capacity building across the cadres, demand management and recovery of arrears, faster disposal of appeals, taxpayer services aligned to the Taxpayers’ Charter, and the extension of data analytics in faceless assessment.

An action plan is an internal management document and confers no right on a taxpayer. It matters here because it drives the departmental workload, and therefore the posting pattern, the appraisal targets and the annual performance appraisal report entries of every officer in the department for the year.

What the Board does not do

Four limits define the Board as sharply as its powers do, and each is a common misconception.

It does not set tax rates or slabs. Those are enacted by Parliament in the annual Finance Act and in the Schedules to the Income-tax Act, 2025. The Board supplies the policy input and administers the result, and it cannot alter a rate, a rebate or a deduction by circular.

It does not assess or decide appeals. An assessment is made by the assessing officer holding jurisdiction over the file, and an appeal runs to the Commissioner (Appeals), the Income Tax Appellate Tribunal, the High Court and the Supreme Court. Section 239 of the Income-tax Act, 2025 does not permit the Board to direct the outcome of a particular case.

It does not control indirect taxes. Section 5(3) of the Central Boards of Revenue Act, 1963 gives every non-direct-tax function of the old Central Board of Revenue to the indirect-tax board unless the Central Government entrusts it to the CBDT.

It does not fix the pay of its own department. Pay comes from the 7th Central Pay Commission structure notified in the Central Civil Services (Revised Pay) Rules, 2016 and administered by the Department of Expenditure, and dearness allowance from the Department of Expenditure’s own orders. The CBDT is a cadre-controlling authority, not a pay-fixing one.

Related Articles

• Income Tax Inspector salary
• Income Tax Officer
• Indian Revenue Service
• SSC CGL
• SSC CGL salary
• Salary by pay level
• Salary by pay level calculator
• 7th CPC salary calculator
• Staff Selection Commission
• Department of Revenue
• Department of Expenditure
• Central government jobs
• Pay matrix
• 7th Central Pay Commission
• Annual increment
• Seniority
• Departmental promotion committee
• Deputation in central government
• APAR
• Take-home salary of central government employees
• Dearness allowance
• House rent allowance
• City classification for HRA
• Transport allowance
• Income tax for government employees
• Income tax for pensioners
• Income-tax Act 2025
• Old versus new tax regime
• Standard deduction
• TDS on salary
• Form 16
• Form 26AS
• Form 10-IEA
• Income tax slabs AY 2027-28
• National Pension System
• Central government employees in India

External references

• Income Tax Department
• Central Board of Direct Taxes
• Income-tax Act, 2025
• Department of Revenue, Ministry of Finance
• Central Board of Indirect Taxes and Customs
• Central Boards of Revenue Act, 1963 on India Code
• Income Tax e-filing portal

References

1. Central Boards of Revenue Act, 1963 (Act 54 of 1963), assented 30 December 1963 and in force 1 January 1964 by Notification No. S.O. 3606 dated 30 December 1963: Section 2(a), Section 2(c), Section 3(1), Section 3(2), Section 4(1) and Section 5(3).
2. Income-tax Act, 2025 (Act No. 30 of 2025), assented 21 August 2025 and in force 1 April 2026: Sections 236, 237, 238, 239, 240, 245 and 533.
3. Income-tax Rules, 2026, notified by Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026, with effect from 1 April 2026.
4. Finance Act, 2018 (Act 13 of 2018), Section 160, renaming the Central Board of Excise and Customs the Central Board of Indirect Taxes and Customs with effect from 29 March 2018.
5. UCO Bank v. Commissioner of Income Tax (1999) 237 ITR 889 (Supreme Court).
6. Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries, Constitution Bench, decided 14 October 2008.
7. Central Civil Services (Revised Pay) Rules, 2016 (G.S.R. 721(E), 25 July 2016), 7th CPC pay matrix levels of the departmental ranks.
8. Central Board of Direct Taxes, Central Action Plan 2026-27, released 13 May 2026.
9. Department of Expenditure Office Memorandum No. 1/1(i)/2026-E.II(B) dated 22 April 2026, dearness allowance at 60% of basic pay with effect from 1 January 2026.