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India transitions from enforcement-driven compliance to trust-based governance, says B V R Subrahmanyam, CEO of NITI Aayog.
NITI Aayog says such reforms will help reduce litigation, boost investor confidence, and create a fair, predictable tax regime aligned with global best practices.
In a move aimed at deepening tax reforms and building a more transparent compliance framework, NITI Aayog on Friday released the second paper in its NITI Tax Policy Working Paper Series, titled ‘Towards India’s Tax Transformation: Decriminalisation and Trust-Based Governance’.
The paper, released by B V R Subrahmanyam, CEO of NITI Aayog, marks a significant step towards shifting India’s tax ecosystem from enforcement-driven compliance to a trust-based governance model. Subrahmanyam said India’s tax reforms are entering a “decisive phase marked by simplification, modernisation, and the integration of trust into tax administration”.
“As India transitions from enforcement-driven compliance to trust-based governance, the focus must shift to proportionate, fair, and transparent enforcement mechanisms that empower taxpayers while protecting fiscal integrity,” he added.
The working paper offers a detailed review of criminal provisions under the Income-tax Act, 2025, examining their relevance, proportionality, and alignment with the government’s reform agenda. It proposes a principle-based framework to rationalise punishments, decriminalise minor and procedural lapses, and strengthen judicial discretion.
According to the paper, while the new Income-tax Act has removed several outdated offences, it still criminalises 35 actions across 13 provisions, many of which carry mandatory imprisonment. The study recommends a calibrated roadmap for decriminalisation—removing jail terms for procedural defaults, reserving criminal sanctions only for fraud or wilful evasion, and expanding the use of civil and administrative penalties instead.
NITI Aayog believes such reforms will help reduce litigation, boost investor confidence, and create a fair, predictable tax regime aligned with global best practices.
The release event brought together representatives from CBDT, CBIC, ICAI, DPIIT, and leading tax experts from Vidhi Legal, Lakshmikumaran & Sridharan, Deloitte, and EY, who worked closely with the NITI Aayog Consultative Group on Tax Policy (CGTP) led by P S Puniha, Distinguished Fellow, and Sanjeet Singh, Programme Director at NITI Aayog.
According to the paper, embedding trust at the core of tax governance will promote voluntary compliance, optimise enforcement resources, and support India’s goal of becoming a globally competitive, high-trust economy.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
October 10, 2025, 15:59 IST
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