Fiscal Policy, Budgetary Reforms and Digitization of Tax Administration in India

Fiscal consolidation has always been a major policy objective and a number of institutional reforms have been undertaken to achieve this objective. This paper analyses the recent budgetary reforms as well as steps towards digitization of tax administration that have contributed to fiscal consolidation and fiscal prudence. In continuation with the government’s emphasis on providing a more transparent, efficient and tax-payer friendly tax administration and improving taxpayer convenience, several initiatives have been launched by the Income Tax Department in recent years to promote the use of digital technology for efficient and transparent administration of income tax. The paper discusses reforms in some of the major processes and compliance requirements and how shifting to online platforms has reduced the need for taxpayers to physically visit the income tax office. In addition, interaction with taxpayers is now characterized by a spirit of trust and respect, relying more on voluntary compliance.