Niti Aayog seeks modern tax framework for 'trust-based governance'

Niti Aayog on Friday (October 10) pitched for establishing a modern tax framework for trust-based governance, including voluntary compliance, transparency, and fairness.

The Aayog, in a working paper titled 'Towards India’s Tax Transformation: Decriminalisation and Trust-Based Governance', further said the Indian tax framework should be aligned with the Viksit Bharat@2047 vision and principles of growth, inclusion, and trust.

Also Read: AI can add up to $600 bn to India's GDP by 2035: NITI Aayog

Calls for ‘paradigm shift’

It said a paradigm shift towards a modern, predictable, and citizen-centric tax system is crucial for enhancing the ease of doing business and ease of living.

According to the Aayog, the government should focus on platforms like "Transparent Taxation – Honouring the Honest" and the Jan Vishwas Act (2023), which aim to reduce the compliance burden.

The paper suggested that the assessment of criminal provisions should be based on foundational principles to assess the legitimacy and necessity of criminal provisions in the Act.

The Aayog also pointed out that offences must be clearly defined, fit for purpose, and periodically reviewed.

Also Read: NITI Aayog for tariff cuts on US agri-dairy-poultry imports; experts sound warning

‘Avoid excessive sanctions’

It also noted that while punishment must be reserved for acts causing real, quantifiable harm, the severity of punishment must match the seriousness of the offence, avoiding excessive sanctions for minor infractions.

The Income-tax Act, 2025, currently criminalises 35 distinct actions and omissions.

Mandatory minimum imprisonment is prescribed for 25 offences, limiting judicial discretion.

(With agency inputs)