India's Tax Authorities Should Make Peace With Its Taxpayers

The relationship remains uneasy and this is crying out for reform

- Mihir Sharma

Indians have long had a confrontational relationship with the nation's tax office, whose adversarial approach has crushed countless small businesses and international investors. This was meant to be the year the government fixed all that and repaired relations with taxpayers.

A few weeks ago, India's federal budget cut taxes for many middle-class Indians. It also promised to present a new law that would drastically simplify how income taxes were calculated and paid.

When the new bill was eventually made public, however, it was a disappointment. As has happened too often in the decade-plus under the government of Prime Minister Narendra Modi, good intentions have been undermined by half-hearted implementation.

Expectations were high. The tax office proudly said that it had put 150 officials on the job, and they had spent 60,000 hours redrafting regulations. The new law is about half as voluminous as the old one.