NITI Aayog tax paper finds Income-tax Act, 2025 still criminalises 35 acts; proposes decriminalisation roadmap
On 10 October 2025 NITI Aayog released the second NITI Tax Policy Working Paper, 'Towards India's Tax Transformation: Decriminalisation and Trust-Based Governance', which finds the Income-tax Act, 2025 still criminalises 35 acts and omissions across 13 provisions.
Summary
On 10 October 2025 NITI Aayog CEO B.V.R. Subrahmanyam released the second paper in the NITI Tax Policy Working Paper Series, titled 'Towards India's Tax Transformation: Decriminalisation and Trust-Based Governance'. The first paper was on 'Enhancing Certainty, Transparency, and Uniformity in Permanent Establishment and Profit Attribution for Foreign Investors in India'. The new paper assesses criminal provisions in the Income-tax Act, 2025 and finds that, although several archaic offences were dropped, the Act still criminalises 35 actions and omissions across 13 provisions, most with mandatory imprisonment. It recommends removing imprisonment for minor procedural defaults, limiting criminal sanctions to fraud or wilful evasion, and relying more on civil and administrative penalties. The paper was prepared with NITI's Consultative Group on Tax Policy.
Key facts
- Paper
- NITI Tax Policy Working Paper Series–II — Decriminalisation and Trust-Based Governance
- Finding
- Income-tax Act, 2025: 35 acts/omissions criminalised across 13 provisions
- Recommendation
- No jail for minor procedural defaults; criminal law only for fraud/wilful evasion
- First paper
- Permanent Establishment & profit attribution for foreign investors
- Released by
- B.V.R. Subrahmanyam, CEO, NITI Aayog
Practice MCQs 2 questions
According to NITI Aayog's tax working paper of October 2025, the Income-tax Act, 2025 continues to criminalise how many actions and omissions?
Show answer
Correct answer: B — 35 across 13 provisions
PIB: the paper highlights that the 2025 Act continues to criminalise 35 actions and omissions across 13 provisions, most prescribing mandatory imprisonment.
Consider the following statements about the NITI Tax Policy Working Paper Series: 1. The first paper in the series dealt with Permanent Establishment and profit attribution for foreign investors in India. 2. The second paper recommends removing criminal sanctions even for cases of fraud and wilful evasion. Which of the statements given above is/are correct?
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Correct answer: A — 1 only
Only 1 is correct. PIB: the first paper was on certainty, transparency and uniformity in Permanent Establishment and profit attribution for foreign investors; the second paper recommends restricting criminal sanctions to cases involving fraud or wilful evasion, not removing them.