To foster trust-based governance in India’s direct tax system, the top government think-tank NITI Aayog has suggested a shift away from over-reliance on criminalisation of offences for compliance in the Income Tax Act. It said the burden of proof of fraud should be on tax officers instead of taxpayers.

Decriminalising minor defaults

It suggested decriminalising minor non-compliances, rationalising punishments, and emphasising civil remedies.

The paper highlighted that while the Income Tax Act , 2025, omits several archaic offences, it continues to criminalise 35 actions and omissions across 13 provisions, most of which prescribe mandatory imprisonment, even for minor procedural defaults.

The think-tank released its second working paper on tax policies on Friday, with ten more to fo

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