TAX COMPLIANCE AND REFORM IN INDIA: THE ROLE OF SIMPLIFICATION, TECHNOLOGY, AND POLICY DESIGN

AUTHOR – ANANNYA SAXENA, STUDENT AT SYMBIOSIS LAW SCHOOL

BEST CITATION – ANANNYA SAXENA, TAX COMPLIANCE AND REFORM IN INDIA: THE ROLE OF SIMPLIFICATION, TECHNOLOGY, AND POLICY DESIGN, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (11) OF 2025, PG. 264-267, APIS – 3920 – 0001 & ISSN – 2583-2344

ABSTRACT

Taxation increases government revenue which could be utilized to fund certain essential services and social goods that the mercantile world would never have provided if they had to operate solely on profits. Given that taxes are obligatory contributions levied on income, it is paramount to put the right tax system in place, one that encourages compliance, while at the same time remains fair to all taxpayers. Tax compliance depends critically on three things: the rate of taxation, the perceived threat of detection, and the penalties for failing to pay taxes.

Tax policy is best formulated when the system has a broad base with a low and simple rate. Simplifying tax laws allows taxpayers to easily understand and comply with their obligations, as well as to minimize the cost of taxation. This denotes the costs of collection for the government, the costs of compliance for the taxpayer, and the cost of output as impacted by taxation.

Encouraging compliance and ensuring that tax systems work fairly for all citizens consist of a straightforward system to collect taxes, which also affords lower tax rates while generating the necessary revenue for public services. In addition, by administrating taxes with modern technologies, it becomes considerably easier to increase detection rates of any refusal to comply and thus encourage voluntary tax compliance.

This paper attempts to develop those design aspects of tax compliance in a way that underlines the contribution of technology in effective tax administration in the Indian context.

Keywords: Tax compliance, Tax administration, Tax rate.