Focus on taxpayers

A ‘nudge’ from the Union Government has prompted more than 30,000 taxpayers to revise their income tax (I-T) returns or file belated returns and declare additional foreign assets and income of about Rs 30,300 crore. A voluntary disclosure campaign under which SMS and e-mails were sent to select taxpayers has yielded good results. This is an important step towards boosting tax compliance through persuasion rather than intimidation. However, this successful outcome is tempered by the fact that around 48,000 direct tax defaulters with dues of Rs 5.91 lakh crore have been declared untraceable. In the case of indirect taxes, the number of such defaulters is in excess of 60,000, while the dues are to the tune of over Rs 43,500 crore. It seems that the measures taken to recover dues have left a lot to be desired. The bitter truth is that many chronic tax evaders have managed to outsmart the authorities.

In recent months, the government has sharpened its focus on honest taxpayers, giving them huge relief in the Union Budget. The Finance Bill, 2025, is another initiative aimed at recognising the contribution of the middle class, which has traditionally been an important vote bank for the BJP. The underwhelming performance in the 2024 Lok Sabha elections appears to have spurred the ruling party to reach out to the tax-burdened public. This approach has already paid dividends in last month’s Delhi Assembly elections.

A new challenge for the government is to firm up the recently introduced Income Tax Bill, which is being examined by a Select Committee of the Lok Sabha. The Bill seeks to achieve tax clarity by rationalising several provisions; minimising the scope for litigation is a key objective. Simplicity and transparency should be at the core of this legislation so that more and more taxpayers come forward to do their bit in the best interests of Indian economy.