Is the Tax Compliance Burden Really Reducing for Indian Taxpayers?
Despite efforts by the Income Tax Department to ease processes and prevent evasion through digitalisation, many individuals and businesses still feel weighed down by high tax compliance burden. From multiple form filings to intense scrutiny and mismatch notices, the road to tax compliance in India remains bumpy for many.
In this blog, we decode what’s really behind the growing compliance fatigue, how the government is responding, and what you can do to stay safe.
What Is the “Tax Compliance Burden”?
The compliance burden refers to the time, cost, and effort required to file returns, maintain records, respond to notices, and meet audit or verification obligations under the tax laws.
Common burdens faced:
- Multiple ITR forms and e-verification processes
- Constant reconciliation of TDS, Form 26AS, AIS/TIS
- Real-time cross-checks on deductions like HRA, home loans
- Notices under Section 143(1)(a) or defective return flags
- GST + Income Tax dual compliance for small businesses
- Penalties for minor lapses due to tech mismatch
Anti-Evasion Push: Good Intention, More Stress?
The government’s anti-evasion measures include:
- AIS/TIS and 360-degree profiling of taxpayer data
- Pre-filled ITRs and SFT reporting to catch high-value spends
- Faceless assessments with automated notices
- Real-time verification of deduction claims (FY 2024–25 onwards)
These efforts aim to curb tax leakage — but they also increase the compliance load on honest taxpayers who must now justify even genuine deductions or cash flows.
Real Example:
A salaried employee claimed deduction for HRA and home loan interest.
But:
- HRA was flagged for lack of rent agreement
- Loan repayment didn’t match AIS data from lender
Result: Automated notice under Section 143(1)(a) and need to revise return — causing confusion and anxiety.
What’s Causing This Growing Burden?
| Reason | Impact |
|---|---|
| Mismatch in AIS/TIS vs actuals | Triggers scrutiny notices even for minor gaps |
| Frequent changes in ITR forms | Requires relearning by taxpayers every year |
| Lack of digital support for small taxpayers | Compliance becomes tech-heavy and confusing |
| Limited grievance redressal | Frustration builds when genuine errors aren’t resolved |
Expert View:
“India’s compliance systems are improving but not yet seamless. More user-friendly interfaces, real-time guidance, and taxpayer education are essential to reduce the burden.”
– CA Anjali Mehta, Tax Advisor
How to Reduce Your Tax Compliance Burden
Here are practical ways to make compliance smoother:
✅ Reconcile Form 26AS and AIS before filing
✅ Keep digital rent receipts, loan certificates ready
✅ Use reliable software or consult a CA
✅ Respond to notices promptly through e-filing portal
✅ Use ITR pre-fill options, but don’t blindly trust them
✅ File early to get more time for corrections
CBDT’s Recent Moves to Simplify
- Circular No. 06/2025 extended ITR deadline to 15th September 2025
- Rule 12 amended via Notification No. 40/2025 to streamline ITR forms
- Pre-filled ITRs for 2025–26 now include salary, interest, dividend, and capital gains data
➡️ Read our full blog on ITR-1 and ITR-4 changes for AY 2025–26
FAQ Section
Q1. Is tax compliance only getting harder?
No, the system is improving digitally, but the transition phase can feel tough. With preparation, it gets easier.
Q2. What if I ignore a 143(1)(a) notice?
It could lead to adjustment of your refund or denial of deductions. Always respond in time.
Q3. Can salaried people also face scrutiny?
Yes, especially if there’s a mismatch in income, deduction, or high-value transactions.
Summary
Despite digital reforms and anti-evasion efforts, the high tax compliance burden in India remains a concern. Mismatches in AIS, changing rules, and tech-based scrutiny stress taxpayers. Timely reconciliation, accurate reporting, and awareness can reduce risks.