INDEX

Chapter No. Title Page No.

TABLE OF CONTENTS ix
LIST OF TABLES xv
LIST OF FIGURES xx
ACRONYMS xxi
ABSTRACT xxiii
CHAPTER 1 INTRODUCTION 1 – 17
CHAPTER 2 REVIEW OF LITERATURE 18 – 45
CHAPTER 3 RESEARCH METHODOLOGY 46 – 65
AN OVERVIEW OF INCOME TAX POLICY AND
CHAPTER 4 66 – 116
ADMINISTRATION
CHAPTER 5 GROWTH OF INCOME TAX REVENUE 117 – 143
PERFORMANCE APPRAISAL OF INCOME TAX
CHAPTER 6 144 – 200
ADMINISTRATION
PERCEPTION OF INCOME TAX ASSESSEES
CHAPTER 7 201 – 287
AND AUTHORITIES
SUMMARY OF FINDINGS, SUGGESTIONS AND
CHAPTER 8 288 – 335
CONCLUSION
BIBLIOGRAPHY
ANNEXURES
Annexure I - Model of E-Taxation System
Annexure II – Questionnaire (Assessees)
Annexure III – Questionnaire (Authorities)
Annexure IV- Permission Letter from Office of the
Chief Commissioner of Income Tax

viii
 TABLE OF CONTENTS
Chapter No. Contents Page No.
1 INTRODUCTION 1 – 17
1.1 Introduction 1
1.2 Evolution of Income-Tax in India. 3
1.2.1 Taxes in Ancient India 3
1.2.2 Taxes during Mughal Period 3
1.2.3 Taxes during British Rule 3
1.2.4 Taxes after Independence 3
1.3 Scheme of Income Tax in India 4
1.4 Organization structure of Income-Tax Department 5
1.4.1 Central Board of Direct Taxes (CBDT) 6
1.4.2 Staff Strength 10
1.5 A Brief Profile of Karnataka State 10
1.5.1 Staff strength in Income Tax Department of 13
Karnataka
1.6 Role of Income Tax Administration 14
1.7 Conclusion 16
2 REVIEW OF LITERATURE 18 – 45
2.1 Introduction 18
2.2 Research Gap 41
2.3 Conclusion 41
3 RESEARCH METHODOLOGY 46 – 65
3.1 Introduction 46
3.2 Statement of the Problem 46
3.3 Research Questions 47
3.4 Need for the Study 48
3.5 Objectives of the Study 48
3.5.1 Hypotheses 48
3.6 Significance of the Study 51
3.7 Scope of the Study 51
3.8 Operational Definitions 52
3.9 Research Design 54
3.10 Sampling Design 55
3.10.1 Sample Size of Assessees 55
3.10.2 Sample Size of Income Tax Authorities 59
3.11 Sources of Data 59
3.11.1 Secondary Data 59
3.11.2 Primary Data 59

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 3.12 Questionnaire Design 60
3.13 Pilot Testing 60
3.14 Period of the Study 61
3.15 Statistical Tools for Data Analysis 61
3.15.1 Inferential Statistics 61
3.15.2 Simple Growth Rate (SGR) 62
3.15.3 Exponential Growth Rate (EGR) 62
3.15.4 Buoyancy Coefficient 62
3.16 Chapter Scheme 63
3.17 Conclusion 64
4 AN OVERVIEW OF INCOME TAX POLICY AND 66 – 116
ADMINISTRATON
4.1 Introduction 66
4.2 Policies on Economic Development 67
4.3 Policies on Social Welfare 68
4.4 Policies for Rationalisation and Simplification 72
4.4.1 Tax rates 73
4.4.2 Prosecution and Penalty Provisions 76
4.5 Policies to Widen the Tax Base 78
4.5.1 Minimum Alternate Tax (MAT) 79
4.5.2 Alternate Minimum Tax (AMT) 80
4.5.3 Dividend distribution tax (DDT) 80
4.5.4 Securities Transaction Tax (SST) 80
4.5.5 Standard Deduction 81
4.6 The Direct Tax Code (DTC) Bill 2010 81
4.7 Major Income Tax Reforms in India 83
4.7.1 Major aspects of Income-Tax Reforms 85
implemented during 1991-92 to 2015-16
4.7.2 Changes applicable to A.Y.2017-18 86
4.8 Structure of Income Tax Administration 90
4.8.1 Assessment Jurisdictions 90
4.8.2 Human Resource Development (HRD) of Income 90
Tax Department
4.8.3 National Academy of Direct Taxes (NADT) 91
4.9 Tax Administration Process 91
4.9.1 PAN Registration of Tax Payers 91
4.9.2 PAN as a Common Business Identification 92
Number (CBIN)
4.9.3 Payment of Taxes 93
4.9.4 Filing of Returns 94

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 4.9.5 Scrutiny Assessments 95
4.9.6 Refunds 97
4.9.7 Tax Deducted at Source (TDS) /Tax Collected at 98
Source (TCS)
4.9.8 CPC (TDS) Work Flow Process 99
4.9.9 Tax Demand Stayed by Courts and ITAT 102
4.9.10 Intelligence and Criminal Investigation 102
4.9.11 Non-Profit Organizations (NPOs) 103
4.10 Tax Payer Service- the present scenario 105
4.11 Global Practice on Autonomy for Tax 109
Administration
4.12 Global practice on Tax Payers’ Rights and 109
Obligations
4.13 Key Performance Indicators of Tax Administration 110
4.14 Conclusion 116
5 GROWTH OF INCOME TAX REVENUE 117 – 143
5.1 Introduction 117
5.2 Indian Tax Structure 117
5.3 Trends in Income Tax to Gross Domestic Product 120
(GDP) Ratio
5.4 Trends in The Growth of Income Tax Revenue 123
5.5 Income Tax Buoyancy Coefficient 125
5.6 Growth in Tax Base 128
5.6.1 Change in the Growth of Non-Corporate Income 128
Tax Assessees
5.6.2 Change in the Growth of Corporate Income Tax 132
Assessees
5.6.3 Registered Companies vs Companies Filed 134
Returns
5.7 State-Wise Share of Income Tax Revenue 137
5.8 Conclusion 143
6 PERFORMANCE APPRAISAL OF INCOME TAX 144 – 200
ADMINISTRATION
6.1 Introduction 144
6.2 Differences between budget estimates and actual 146
collection.
6.3 Pre-assessment and post assessment collection of 149
revenue.
6.4 Tax Deduction at Source /Tax Collection at Source 152
6.5 Cost of Collection 154

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 6.6 Arrears of Tax Demand 156
6.7 Tax Recovery Machinery 158
6.8 Status of Refund Claims 160
6.9 Disposal of Assessments 163
6.10 Status of Appeal Cases 167
6.11 Status of Prosecution Cases 169
6.12 Functioning of Settlement Commission 172
6.13 Errors in Assessments and its impact on Revenue 174
6.13.1 Quality of Assessments 174
6.13.2 Administration of Tax Concessions/ 174
Exemptions/Deductions
6.13.3 Income Escaping Assessments due to omissions 175
6.13.4 Others – Overcharge of Tax/Interest etc. 175
6.14 Widening the Tax Base 181
6.15 Surveys Conducted and Undisclosed Income 189
Detected
6.16 Tax Payers’ Services 192
6.16.1 Aaykar Sampark Kendra (ASK) 192
6.16.2 Tax Return Preparer Scheme (TRP) 193
6.16.3 E-Payment of Taxes 194
6.16.4 E-Filing of Income Tax Returns 195
6.16.5 Ensuring Compliance with Tax Obligation 197
6.16.6 Tax Deduction at Source (TDS) 198
6.17 Conclusion 200
7 PERCEPTION OF INCOME TAX ASSESSEES AND 201 – 287
AUTHORITIES
7.1 Introduction 201
7.2 Demographic profile of Respondents 203
7.3 Assessees’ Perception on the Income Tax System in 207
India
7.4 Perception Towards Rationalization and 213
Simplification of Income Tax System
7.5 Perception Towards the Major Difficulties in 218
Compliance
7.6 Perception On the Reasons for Resorting to 222
Professional Advice
7.7 Tax Morale Among the Assessees 224
7.8 Perception Regarding Refund Measures 228
7.9 Perception Towards Tax Evasion 230
7.10 Reasons for Tax Evasion 231

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 7.11 Perception Towards Tax Incentives 233
7.12 Perception Towards Assessee Friendly Measures 235
7.13 Perception Towards Income Tax Authorities 240
7.14 Perception Towards System of Tax Deducted at 241
Source (TDS)
7.15 Perception Towards the Results of Income Tax 243
Reforms
7.16 Usage of TRP Services (TRPs) 245
7.17 Awareness of Aaykar Sampark Kendra (ASK) 247
7.18 Perception Towards Tax Payers Information Services 248
7.19 Perception Towards Suggestive Measure to Widen 249
the Tax-Base
7.20 Analysis of Perception of Income Tax Authorities 253
7.21 Demographic Profile of the Respondents 254
7.22 Perception Towards Human Resource Management 257
(HRM) of Income Tax Department
7.23 Perception Towards Income Tax System in India 260
7.24 Perception Towards Rationalisation and 262
Simplification Measures
7.25 Perception Towards Major Difficulties in 267
Compliance
7.26 Perception Towards the Reasons for Low 269
Compliance
7.27 Perception Towards the Impact of Income Tax 271
Reforms
7.28 Perception Towards the Issues Involved in TDS 273
System
7.29 Perception Towards Tax-Payers’ information 276
Services Provided by The Income Tax
Administration
7.30 Perception Towards the Issues Related to Income 279
Tax Administration
7.31 Suggestive Measures to Widen the Tax Base 284
8 SUMMARY OF FINDINGS, SUGGESTIONS AND 288 – 335
CONCLUSION
8.1 Introduction 288
8.2 Objective 1: An Overview of Income Tax Policy 288
and Administration
8.3 Objective 2: To Examine the Income Tax Reforms 294
in India From 2000-01 To 2015-16

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8.4 Objective 3: To Study the Growth of Income Tax 301
Revenue
8.5 Objective 4: To Evaluate the Performance of 305
Income Tax Department
8.6 Objective 5: To Study the Perception of Assessees 313
and Authorities
8.7 Analysis of Perception of Income Tax Authorities 318
8.8 Major Findings 321
8.9 Suggestions 323
8.10 Conclusion 333
8.11 Limitations of The Study 334
8.12 Scope for Further Research 335
BIBLIOGRAPHY
ANNEXURES
Annexure I - Model of E-Taxation System
Annexure II – Questionnaire (Assessees)
Annexure III – Questionnaire (Authorities)
Annexure IV- Permission Letter from Office of the Chief
Commissioner of Income Tax

xiv
 LIST OF TABLES
Table Title of the Table Page No.
No.
1.1 Growth of Income Tax Revenue of Karnataka State 11
1.2 District-Wise Share Of Net State-Domestic Product at Current 12
Market Price
1.3 Sanctioned and Working Strength in Income Tax Department- 13
Karnataka
3.1 Status-Wise, Number of Tax Payers of Sampling Area 56
3.2 Sample Size Under Proportionate Random Method 57
3.3 Final Sample Size of Different Stratum 58
4.1 Health and Medical Benefits Scheme 70
4.2 Income Tax Rates for Individuals, HUFs, AOPs and BOIs 73
4.3 Prosecution and Penalty for Non-Compliance of TDS 76
Provisions
4.4 Rates of TDS and Threshold Limit 78
4.5 Comparative Performance Indicators of Key Tax 111
Administration of Selected Countries
5.1 Share of Direct And Indirect Tax Revenue of Central 118
Government
5.2 Income Tax to GDP Ratio 120
5.3 Trends in Growth of Income Tax Revenue 123
5.4 Income Tax Buoyancy 126
5.5 Growth in Income-Wise Distribution Non-Corporate 130
Assessees
5.5.1 Growth In Income-Wise Distribution of Corporate Assessees 133
5.5.2 Registered Companies Vs Working Companies 135
5.6 State-Wise Distribution of Income Tax Revenue 138
5.7 Percentage of Distribution of Income Tax Revenue of the 140
States
5.8 State-Wise Income Tax to State Domestic Product Ratio 142
6.1 Difference in Budget Estimation and Actual Collection of 147
Revenue
6.2 Pre-Assessments and Post-Assessment Collection of Tax 151
6.3 TDS/TCS as a Share of Total Collection 153
6.4 Cost of Collection 155
6.5 Arrears of Tax Demand 157
6.6 Position of Certified Demand 159
6.7 Status of Refund Claims 161

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 6.8 Disposal of Assessments and Pendency of Workload 165
6.9 Status of Appeal Cases 168
6.10 Status of Prosecution Cases 170
6.11 Functioning of Settlement Commission 173
6.12 Errors in Assessments and its Tax Effect 177
6.13 State-Wise Assessments with Errors and Tax Effect 179
6.14 Effective Number of Assessees 182
6.15 Pan Data Base 185
6.16 Number of assessess on the basis of range-wise income 186
declared in the F.Y. 2014-15
6.17 Number of Returns Filed by Individuals 188
6.18 Aggregate of Tax Payable Reported in all Returns within the 188
Slabs
6.19 Surveys and Detection of Undisclosed Income 189
6.20 Services of Aaykar Sampark Kendra 192
6.21 Services of Tax Return Preparers 193
6.22 E-Payment of Taxes 194
6.23 Growth of E-Filed Returns 195
6.24 Data on Non-Filers Monitoring System 197
6.25 E-Mails Sent and Postage Cost Saved 199
7.1 Reliability Statistics of Assessees Perception 203
7.2 Demographic Variables of Individual Assessees 205
7.3 Cross-Tabulation of Jurisdiction and Type of Persons as per 206
I.T. Act
7.4 KMO And Bartlett's Test for Perception on Income Tax 207
System
7.5 Total Variance Explained for Perception on Income Tax 208
System
7.6 Rotated Component Matrix for Perception on Income Tax 209
System
7.6(a) Analysis of Variance (ANOVA) of Perception on Income Tax 212
System
7.7 KMO And Bartlett's Test of Perception Towards 213
Rationalisation and Simplification
7.8 Total Variance Explained of Perception Towards 214
Rationalisation and Simplification

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7.9 Rotated Component Matrix of Perception Towards 215
Rationalisation and Simplification
7.10 Analysis of Variance (ANOVA) of Perception Towards 217
Rationalisation and Simplification
7.11 KMO and Bartlett's Test of Perception Towards 219
Rationalisation and Simplification
7.12 Total Variance Explained of Perception Towards 219
Rationalisation and Simplification
7.13 Rotated Component Matrix of Perception Towards 220
Rationalisation and Simplification
7.14 Test of Homogeneity of Variances of Perception Towards 221
Rationalisation and Simplification
7.15 ANOVA of Variances of Perception Towards Rationalisation 221
And Simplification
7.16 Frequency distribution of Reasons for Professional Advice 222
7.17 Descriptive Statistics of Reasons for Professional Advice 223
7.18 ANOVA of Reasons Professional Advice 224
7.19 Frequency distribution of statements on Tax Morale 225
7.20 Frequency distribution of Tax Morale Mean score 227
7.21 Statistics of Tax Morale Mean Score 227
7.22 Descriptive Statistics of perception towards Refund Measures 229
7.23 ANOVA of Perception on Refund Measures 229
7.24 Descriptive Statistics of perception regarding Tax Evasion 230
7.25 Test of Homogeneity of Variances of Tax Evasion Mean score 231
7.26 ANOVA of perception towards Tax Evasion 231
7.27 Descriptive statistics of Reasons for Tax Evasion 232
7.28 Kendall’s Coefficient of Concordance of Perception towards 233
Tax Evasion
7.29 Descriptive statistics of Perception towards Tax Incentives 234
7.30 Kendall’s Coefficient of Concordance of Perception towards 235
Tax Incentives
7.31 KMO and Bartlett's Test of Perception towards Assessee 236
friendly measure
7.32 Total Variance Explained of Perception towards Assessee 237
friendly measure
7.33 Rotated Component Matrix of Perception towards Assessee 238
friendly measure
7.34 Kruskal Wallis Test of Perception towards Assessee friendly 239
measures

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7.35 Frequency Distribution of perception towards Income Tax 241
Authorities
7.36 Descriptive Statistics of Perception towards TDS 242
7.37 Kruskal Wallis Test of perception towards TDS 243
7.38 Distribution of Mean score of perception towards Reform 244
results across Jurisdiction
7.39 Kendall’s Coefficient of Concordance of perception towards 245
reform results
7.40 Cross-Tabulation of TRP Services and Occupation 246
7.41 Pearson Chi-Square Tests of TRP Services and Occupation 246
7.42 Descriptive Statistics of Perception towards TRP services 247
7.43 Frequency Distribution of Awareness of ASK 248
7.44 Mean Values of Perception towards Tax payers information 249
services across Jurisdiction
7.45 Descriptive Statistics of Suggestive measures to widen the tax 250
base
7.46 Reliability Statistics of perception of Income Tax Authorities 253
7.47 Demographic profile of Respondents (Income Tax 255
Authorities)
7.48 Cross-tabulation of Jurisdiction and Designation of 255
Authorities
7.49 Mean Scores of Perception towards Human Resource 257
Management across Jurisdiction
7.50 Descriptive Statistics of H.R.M. in Income Tax Department 259
7.51 Kruskal Wallis Test of perception towards H.R.M. 259
7.52 Descriptive statistics of perception towards Income tax 261
system in India
7.53 Kruskal Wallis Test of perception towards Income Tax 262
System
7.54 Descriptive statistics of perception towards Rationalization 263
and simplification measure
7.55 ANOVA of Perception Towards Rationalisation Measures 265
7.56 Descriptive Statistics of Difficulties In Compliance 267
7.57 Kendall's Coefficient of Concordance of difficulties in 268
Compliance
7.58 Descriptive Statistics of reasons for low compliance 270
7.59 Kendall's Coefficient of Concordance of reasons for low 270
compliance
7.60 Descriptive Statistics of Results of Tax Reforms 272

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7.61 Kendall's Coefficient of Concordance of Results of Tax 272
Reforms
7.62 Frequency Distribution of Perception Towards TDS System 274
7.63 Descriptive Statistics of perception towards issues Related to 275
TDS System
7.64 Kendall's Coefficient of Concordance of perception towards 276
TDS System
7.65 Descriptive Statistics of Perception Towards Tax Payer 277
Information Services
7.66 Kendall's Coefficient of Concordance of perception towards 278
tax payers services
7.67 KMO and Bartlett's Test of perception towards Income tax 279
administration
7.68 Total variance of perception towards Income tax 281
administration
7.69 Rotated Component Matrix of perception towards Income tax 282
administration
7.70 Kruskal Wallis Test of perception towards Income Tax 283
Administration
7.71 Descriptive Statistics of Suggestive Measures to Widen The 285
Tax Base
7.72 Kendall's Coefficient of Concordance of perception towards 286
measures to widening the tax base

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 LIST OF FIGURES
Figure Title of the Table Page No.
No.
1.1 The Organizational Structure of CBDT 8
1.2 Field Level Organization Structure in CBDT 9
1.3 Organizational Structure of Income Tax Department - 15
Karnataka –Goa Region
4.1 Corporate Tax Rates across select countries 74
4.2 The Work-flow Process of CPC (TDS) 101
5.1 Share Of Direct Tax And Indirect Tax in Total Tax 119
5.2 Income Tax to GDP ratio 121
5.2.1 Tax-GDP Ratio of Different Countries 122
5.3 Trend in the growth of Income tax revenue 124
5.4.1 Buoyancy Coefficient of Personal Income Tax 127
5.4.2 Buoyancy Coefficient of Corporate Income Tax 127
5.4.3 Buoyancy Coefficient of Total Income Tax 128
5.5 Income-Wise Number of Personal Income Tax Assessees 131
5.5.1 Income-Wise Composition of Personal Income Tax Assessees 132
5.5.2 Income-Wise Distribution of Corporate Income Tax Assessees 134
5.5.3 Corporate Assessees having Income above `25 Lakh 136
5.5.4 Registered Companies vs companies filed returns 136
6.1 Budget Estimate vs Actual Collection of Taxes 148
6.2 Pre And Post Assessment Collection of Tax 152
6.3 TDS/TCS to Total Tax Collection 154
6.4 Cost (Per 100 Rupees) of Collection 156
6.5 Position of Tax Demand difficult to recover 158
6.6 Position Of Certified Tax Demand 160
6.7 Outstanding refund claims and interest on refund 162
6.8 Position of Assessments 166
6.9 Appeal Cases with CIT (A) and Court/ITAT 169
6.10 Status of Prosecution Cases 171
6.11 Position Of Cases With Settlement Commission 174
6.14 Growth of number of effective assessees 183
6.15 Survey & Detection of undisclosed income 190
6.16 Growth of E-filed returns 196
7.1 Histogram of the Tax morale mean score among the 227
respondents
7.2 Designation-wise distribution of respondents 256

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 ACRONYMS
ACIT : Assistant Commissioner of Income Tax
ADDL.CIT : Additional Commissioner of Income Tax
AGR : Annual Growth Rate
AIR : Annual Information Return
AO : Assessing Officer
AU : Assessment Unit
BOT : Build Operate Transfer
CAG : Comptroller and Auditor General
CBDT : Central Board of Direct Taxes
CBEC : Central Board of Excise and Customs
CBIN : Common Business Identification Number
CBIN : Common Business Information Network
CCIT : Chief Commissioner of Income Tax
CGA : Controller General of Accounts
CIB : Central Information Branch
CIN : Challan Identification Number
CIT : Commissioner of Income Tax
CPC : Centralized Processing Cell
CPLGS : Central PAN Ledger Generation System
DCIT : Deputy Commissioner of Income Tax
DDT : Dividend Distribution Tax
DG : Director General
DGIT : Director General of Income Tax
DIT : Director of Income Tax
DOR : Department of Revenue
DW & BI : Data-Warehousing and Business Intelligence
EDI : Electronic Data Interface
EGR : Exponential Growth Rate
e-RI : e-return Intermediary
GDP : Gross Domestic Product
GST : Goods and Service Taxes
HNWI : High Net Worth Individuals
HRA : House Rent Allowance
I.T : Income Tax
ICT : Information Communication Technology
IT : Information Technology
ITD : Income Tax Department
ITI : Income Tax Inspector

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ITO : Income Tax Officer
ITPS : Integrated Taxpayers Profiling System
IVRS : Interactive Voice Response System
JCIT : Joint Commissioner of Income Tax
LLP : Limited Liability Partnership
MOU : Memorandum of Understanding
NADT : National Academy of Direct Taxes
NMS : Non-filers Monitoring System
NPO : Non-Profit Organization
NSDL : National Securities Depository Ltd
NSDP : Net State Domestic Product
OLTAS : Online Tax Accounting System
PAN : Permanent Account Number
PR. CCIT : Principal Chief Commissioner of Income Tax
PR.AO : Principal Administrative Officer
PR.CIT : Principal Commissioner of Income Tax
ROC : Registrar of Companies
SDP : State Domestic Product
SFT : Statements of Financial Transactions
SSN : Social Security Number
STT : Security Transaction Tax
TAN : Tax Deduction Account Number
TARC : Tax Administration Reforms Committee
TDS : Tax Deducted at Source
TIN : Tax Information Network
TRACES : TDS Reconciliation, Accounting and Correction Enabling System
TRO : Tax Recovery Officer
UTI-ISL : UTI-Infrastructure Technology and services Ltd
ZAO : Zonal Accounts Offices

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 ABSTRACT

The main objective of the study is to examine the Income Tax reforms in
India. The study also examined the growth of Income Tax Revenue and Performance
of Income Tax Department from 2000-01 to 2015-16 and studied the perception of
Income Tax Assessees and Authorities towards Income Tax System and
administration in India. The study encompassed the examination of perception
towards Income Tax System and administration, Professional guidance, Income tax
compliance, tax morale, tax incentives, Tax payer services, TDS and refund measures,
issues in tax administration and measures to widen the tax base.

The data was collected from both secondary and primary sources. The primary
data consists of questionnaires collected from both Assessees and Authorities. The
study finds that the measures initiated seem to be insufficient and further
rationalization is required to widen the tax base and make the tax provisions effective.
Respondents opined that the efficiency of the income tax administration in the country
has been improving. However, the international comparison reveals the fact that Tax-
GDP ratio has been far below the rates of other developed and developing countries.
The number of income tax assessees, income tax revenue, income tax to GDP ratio
and buoyancy coefficient showed an increasing trend during the study period. The
study finds that 85% of gross collection of income tax has been realized at pre
assessment stage; The cost of collection as a percentage of a rupee of tax and number
of outstanding refund claims declined during the study period. however, the number
of pending assessments, pending cases under prosecution proceedings, amount of
arrear of tax demand, amount of interest on refunds, pending appeals, assessment
cases involving errors and its impact on tax revenue loss increased during this period.
Number of effective assessees increased, but there exists a difference between
registered companies and companies filed returned. This may be due to closure or
BIFR, or merger, or conversion into LLPs. Further, it is evident from the analysis that
the e-governance initiatives by the department made the processing function much
easier than before. Thus, it is observed that the e-filed returns were increased, e-
payment, refund banker scheme, e-nivaran project established as a pilot programme to
redress grievances shown a pleasing progress from their inception. However, the
Publicity programmes of the department are still at its infant stage. It is observed that

xxiii
the Tax system completely unsuccessful in ensuring horizontal equity and socio-
economic justice. Tax evasion, unsatisfactory tax payer services and corruption
prevailing in the tax system were identified as the most important reasons for low tax
compliance. Lack of tax payers’ education and motivation, lack of publicity,
ineffective penalty provisions, lack of deterrence mechanism, high tax rates, and
complexity of tax laws are also contributing factors for low compliance. It is found
that the recent reforms resulted in notable changes in the Income Tax administration.
The Income Tax department is modernized and the speed of adopting the changes are
laudable and commendable. However, the rate of growth and the level of achievement
made is not up to the international standard.

The study suggested to initiate measures to further reform the Income tax
policies for simplification and rationalization. The study strongly recommends to
include various persons and enterprises including trusts; synchronize PAN, Aadhar
Card, mobile number, and bank account numbers; encourage Cash-less transactions;
measures to improve tax payer services, and also some useful structural reform
measures have been suggested. The study suggested to adopt, at the earliest, e-
taxation with double entry system based on Aadhar / PAN / Unique ID as a virtual
tool with the support of a Unique software to monitor all monitory transactions of
assessees. This would not only enable effective tax administration and widen the tax
base, but also reduces tax evasion. The study also suggested to establish and maintain
a unique Account to manage and adjust refunds.

xxiv