New Delhi: India’s tax reforms are entering a “decisive phase” focused on simplification, modernization and trust-based governance, Niti Aayog CEO B V R Subrahmanyam said on Friday.
Emphasizing “proportionate, fair, and transparent enforcement mechanisms,” he said the next phase of reforms aims to reduce litigation, build investor confidence, and align India’s tax regime with global standards.
Niti Aayog released the second paper in its tax policy working paper series titled:‘Towards India’s Tax Transformation: Decriminalisation and Trust-Based Governance’. The paper continues the government’s push toward evidence-based tax reform, following the first paper on improving transparency and uniformity for foreign investors.
The latest paper reviews criminal provisions under the Income Tax Act, 2025, analysing their relevance and proportionality. It calls for a principle-based framework to rationalise punishments, decriminalise minor and procedural offences, and strengthen judicial discretion.
While noting that several outdated offences have been scrapped under the 2025 Act, the paper points out that 35 actions and omissions across 13 provisions remain criminalised — most carrying mandatory imprisonment. It recommends removing imprisonment for procedural defaults, reserving criminal sanctions for wilful tax evasion and fraud, and enhancing civil and administrative penalties instead.
Officials from CBDT, CBIC, ICAI, DPIIT, and leading tax experts from Vidhi Legal, Lakshmikumaran & Sridharan, Deloitte, and EY attended the release event. The paper was developed in consultation with the Niti Aayog Consultative Group on Tax Policy, led by Dr. P S Puniha and Sanjeet Singh.
The paper concludes that embedding trust in tax governance will promote voluntary compliance, optimize enforcement resources, and strengthen India’s reputation as a fair and globally competitive economy.