NITI Aayog has proposed major reforms in the Income Tax Act, 2025 to make tax administration fairer and less coercive.
NITI Aayog’s proposal aims to transform India’s tax system by introducing trust-based governance, decriminalizing minor offenses, and promoting transparency.
Here are the key aspects of Niti Ayog recommendations :
Decriminalization of Minor Offenses: NITI Aayog recommends decriminalizing 12 minor offenses, such as filing delays or minor reporting errors, to reduce litigation and promote voluntary compliance.
Removal of Mandatory Minimum Imprisonment: The proposal suggests removing mandatory minimum imprisonment terms for most offenses, allowing courts to decide punishments based on the severity of the case.
Shifting Burden of Proof: The burden of proof would shift from taxpayers to tax authorities, requiring them to demonstrate fraudulent intent beyond reasonable doubt.
Trust-Based Governance: The focus is on distinguishing between genuine mistakes and willful evasion, reserving criminal prosecution for serious cases of tax evasion and fraud.
Three-Tier Reform Strategy:
Fully Decriminalize 12 Offenses: Minor infractions would be addressed through civil or monetary penalties.
17 Offenses with Fraudulent Intent: Criminal liability would be retained only if fraudulent or mala fide intent is proven.
6 Core Offenses: Serious offenses involving deliberate tax evasion, falsification of accounts, or fabrication of evidence would remain criminal.
Benefits: These reforms are expected to :
– Promote trust and cooperation between taxpayers and tax authorities
– Encourage voluntary compliance
– Reduce fear-driven compliance and litigation
– Align India’s tax laws with global best practices
– Support India’s vision of becoming a globally competitive, high-trust economy
By adopting these reforms, India can create a more taxpayer-friendly environment, reduce compliance burdens, and foster economic growth.
Team- Intellex Strategic Consulting Private Limited
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