Review of Professional Management

Effect of Personal Income Tax Reforms on Taxpayers in India

Ritu Sapra¹, Promila Bhardwaj², Rishabh Gupta³and Shivani Abrol⁴

First Published 13 Nov 2025. https://doi.org/10.1177/09728686251363735

Article Information

Corresponding Author:

Promila Bhardwaj, Dyal Singh Evening College, University of Delhi, Delhi 110003 India.
Email: promilab_com@dsce.du.ac.in

Affiliation: Department of Commerce, Dyal Singh Evening College, University of Delhi

¹ Department of Commerce, University of Delhi, India

²Dyal Singh Evening College, University of Delhi, India

³ Shaheed Bhagat Singh College, University of Delhi, India

⁴Zakir Husain Delhi College, University of Delhi, India

Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (http://www.creativecommons.org/licenses/by-nc/4.0/) which permits non-Commercial use, reproduction and distribution of the work without further permission provided the original work is attributed.

Abstract

India has a three-tier federal tax structure involving central, state and local municipal bodies, which collect funds from the taxpayers so as to meet its public spending and expenditure needs. The Indian taxation system has its traces in ancient India as well, wherein taxes were used to pay in the form of gold coins, cattle, grains, etc. In order to remove the complexity of the Indian tax system, a series of tax reforms have been introduced by the government from time to time. The main objective of the article is to examine the effect of personal income tax reforms on taxpayers. The article adopts a primary data collection method having a sample size of 250 respondents chosen from Haryana, Delhi and Delhi NCR. The ANOVA is applied for the analysis of the data. The findings of the article revealed that the income tax structure is still complicated despite reforms introduced by the government based on the recommendations of various tax reform committees. Further, it is found that taxpayers are satisfied with both their tax liability and the time allowed to them for paying off their taxes. It has been concluded that giving extra incentives to honest taxpayers will have a positive impact on the overall tax revenue.

Keywords

Income tax structure, personal income tax reform, tax liability, tax revenue

References

Adhikara, M. A., Maslichah, N. D., & Basyir, M. (2022). Taxpayer compliance determinants: Perspective of theory of planned behavior and theory of attribution. International Journal of Business and Applied Social Science, 8(1), 395–407.

Agarwal, P. K. (1991). Income inequality and elasticity of personal income tax. Economic & Political Weekly, July 20, 1991. https://www.jstor.org/stable/41498470

Ahmad, E., & Stern, N. (1983). The evaluation of personal income taxes in India. Retrieved, 22 August 2025, from https://www.researchgate.net/publication/297318800_The_evaluation_of_personal_income_taxes_in_India

Akitoby, B., Baum, A., Hackney, C., Harrison, O., Primus, K., & Salins, V. (2020). Tax revenue mobilization episodes in developing countries. Policy Design and Practice, 3(1), 1–29. https://doi.org/10.1080/25741292.2019.1685729

Alabede, J. O., Ariffin, Z. Z., & Idris, K. M. (2011). Individual taxpayers’ attitude and compliance behaviour in Nigeria: The moderating role of financial condition and risk preference. Journal of Accounting and Taxation, 3(5), 91–104. http://www.academicjournals.org/JAT

Ali, M., Fjeldstad, O. H., & Sjursen, I. H. (2014). To pay or not to pay? Citizens’ attitudes toward taxation in Kenya, Tanzania, Uganda, and South Africa. World Development, 64, 828–842.

Alinaghi, N., & Reed, W. R. (2021). Taxes and economic growth in OECD countries: A meta-analysis. Public Finance Review, 49(1), 3–40. https://doi.org/ 10.1177/1091142120961775

Arnold, J. M., Bassanini, A., & Johansson, Å. (2011). Tax policy for economic recovery and growth. Economic Journal, 121(550), F59–F80. https://doi.org/10.1111/j.1468-0297.2010.02415.x

Atkin, D., & Donaldson, D. (2022). The role of trade in economic development. In Handbook of international economics (Vol. 5, pp. 1–59). Elsevier. https://doi.org/ 10.1016/bs.hesint.2021.11.001

Bernardi, L., & Fraschini, A. (2005). Tax system and tax reforms in India. Retrieved, 22 August 2025, from http://polis.unipmm.it/pubbl/RePEc/uca/ucapdv/fraschini51.pdf

Bokil, A. (2003). Tax reforms in India. The Indian Journal of Commerce, 56(2–3), 95–105.

Brockmann, H., Genschel, P., & Seelkopf, L. (2016). Happy taxation: Increasing tax compliance through positive rewards? Journal of Public Policy, 36(3), 381–406. https://doi.org/10.1017/S0143814X15000331

Carroll, S. (1989). Taxing wealth. Journal of Post Keynesian Economics, 12(1), 49–69.

Chan, N., Ghosh, M., & Whalley, J. (1999). Evaluating tax reform in Vietnam, using general equilibrium methods. Retrieved, 22 August 2025, from http://www.economics.uwo.ca/econref/WorkingPapers/researchreports/wp/1999/wp9906.pdf

Chu, S., Ritter, W., & Hawamdeh, S. (2010). Managing knowledge for global and collaborative innovations. World Scientific Publishing.

Creedy, J. (2009). The personal income tax structure: Theory and policy. Retrieved, 22 August 2025, from http://www.economics.unimelb.edu.au/downloads/wp/wp09/1063.pdf

Cummings, R. G., Martinez-Vazquez, J., McKee, M., & Torgler, B. (2009). Tax morale affects tax compliance: Evidence from surveys and an artefactual field experiment. Journal of Economic Behavior & Organization, 70(3), 447–457.

Dalvi, M. Q., & Ansari, M. M. (1986). Measuring fiscal performance of the central and the state governments in India: A study in resource mobilization. Indian Economic Journal, 33(4), 107–110.

Damajanti, A., & Karim, A. (2017). Effect of tax knowledge on individual taxpayers compliance. Economics & Business Solutions Journal, 1(1), 1–19. https://core.ac.uk/download/pdf/228864377.pdf

Das-Gupta, A. (2004). The economic theory of tax compliance with special reference to tax compliance costs. Retrieved, 22 August 2025, from http://www.nipfp.org.in/working_paper/wp13.pdf

Delgado, M. C. D., Jara, H. X., Oliva, N., & Torres, J. (2020). Simulating personal income tax reforms and fiscal gains in the Andean region. Inter-American Development Bank. Retrieved, 22 August 2025, from https://publications.iadb.org/publications/english/document/Simulating-Personal-Income-Tax-Reforms-and-Fiscal-Gains-in-the-Andean-Region.pdf

Dennis, R., Hamilton, D., Arnold, R., Demiroglu, U., Foertsch, T., Lasky, M., Nishiyama, S., Ozanne, L., Peterson, J., Russek, F., Sturrock, J., & Weiner, D. (2004). Macroeconomic analysis of a 10 percent cut in income tax rates. Congressional Budget Office. Retrieved, 22 August 2025, from https://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/54xx/doc5485/2004-07.pdf

Ekpo, A. H., & Ndebbio, J. E. (1996). Fiscal operations in a depressed economy: Nigeria, 1960–90. International Development Research Centre. Retrieved, 22 August 2025, from http://idl-bnc.idrc.ca/dspace/bitstream/10625/13171/1/104735.pdf

Fjeldstad, O. H., & Rakner, L. (2003). Taxation and tax reforms in developing countries: Illustrations from sub-Saharan Africa. Chr. Michelsen Institute. Retrieved, 22 August 2025, from http://www.cmi.no/publications/file/?1551=taxation-and-tax-reforms-in-developing-countries

Gale, W. G., & Samwick, A. A. (2014). Effects of income tax changes on economic growth. Brookings Institution. Retrieved, 22 August 2025, from https://www.brookings.edu/wp-content/uploads/2016/06/09_effects_income_tax_changes_economic_growth_gale_samwick.pdf

Gemmell, N., Kneller, R., & Sanz, I. (2011). The timing and persistence of fiscal policy impacts on growth: Evidence from OECD countries. The Economic Journal, 121(550), F33–F58. https://doi.org/10.1111/j.1468-0297.2010.02414.x

Gnangnon, S. K. (2023). Effect of the shadow economy on tax reform in developing countries. Economies, 11(3), 96. https://doi.org/10.3390/economies11030096

Gupta, A. (2009). The trends and responsiveness of personal income tax in India. Indira Gandhi Institute of Development Research. Retrieved, 22 August 2025, from http://www.igidr.ac.in/pdf/publication/PP-062-29.pdf

Gupta, S., & Jalles, J. A. (2022). Do tax reforms affect income distribution? Evidence from developing countries. Economic Modelling, 110, 105804. https://doi.org/10.1016/j.econmod.2022.105804

Islam, A. (2001). Issues in tax reforms. Asia-Pacific Development Journal, 8(1), 1–12.

Jensen, A., & Di Gregorio, E. (2017). A study on personal income tax. International Growth Centre. Retrieved, 22 August 2025, from https://www.theigc.org/wp-content/uploads/2019/01/Jensen-and-Di-Gregorio-2017-Final-report.pdf

Kaldor, N. (1956). Indian tax reform: Report of a survey. Ministry of Finance, Government of India. https://elibrary.sansad.in/server/api/core/bitstreams/51161156-47ec-4967-b53f-774519cf76b4/view

Kautilya. (2017). Kautilya’s Arthasastra (R. Shamasastry, Trans.). Mysore Press. (Original work published ca. 321–286 BCE; Original published 1951). Retrieved, 22 August 2025, from https://archive.org/details/in.gov.ignca.900/page/n67/mode/2up?q=tax

Keen, M., & Smith, S. (2007). VAT fraud and evasion: What do we know, and what can be done? SSRN. Retrieved, 22 August 2025, from https://doi.org/10.2139/ssrn.964339

Kesselman, J. R. (2001). Payroll taxes in the finance of social security. In A. Berry (Ed.), Labor market policies in Canada and Latin America: Challenges of the new millennium. Springer. https://doi.org/10.1007/978-1-4757-3347-1_6

Levine, D. M., Krehbiel, T. C., Berenson, M. L., & Viswanathan, P. K. (2009). Business statistics: A first course (4th ed.). Pearson Education South Asia.

Lymer, A., & Oats, L. (2009). Taxation: Policy and practice (16th ed.). Fiscal Publications. http://www.accenture.com

Macek, R. (2015). The impact of taxation on economic growth: Case study of OECD countries. Review of Economic Perspectives, 14(4), 309–328. https://doi.org/10.1515/revecp-2015-0002

Mathai, J. (1954). Taxation enquiry commission. Ministry of Finance, Government of India. https://elibrary.sansad.in/server/api/core/bitstreams/7c2be29b-1352-4cbebe32-96208c6db7ce/view

Mdanat, M. F., Shotar, M., Samawi, G., Mulot, J., Arabiyat, T. S., & Alzyadat, M. A. (2018). Tax structure and economic growth in Jordan, 1980–2015. EuroMed Journal of Business, 13(1), 102–127. https://doi.org/10.1108/EMJB-11-2016-0030

Mertens, K., & Olea, J. L. M. (2018). Marginal tax rates and income: New time series evidence. The Quarterly Journal of Economics, 133(4), 1803–1884. https://doi.org/10.1093/qje/qjy008

Mintz, J. M. (1991). The role of wealth taxation in the overall tax system. Canadian Public Policy, 17(3), 248–263.

Neog, Y., & Gaur, A. K. (2020). Tax structure and economic growth: A study of selected Indian states. Economic Structures, 9, 38. https://doi.org/10.1186/s40008-020-00215-3

Nguyen, A. D. M., Onnis, L., & Rossi, R. (2021). The macroeconomic effects of income and consumption tax changes. American Economic Journal: Economic Policy, 13(2), 439–466. https://doi.org/10.1257/pol.20170241

O’Donoghue, P. (2010). Research methods for sports performance analysis. Routledge.

Palil, R. M. (2010). Tax knowledge and tax compliance determinants in self-assessment system in Malaysia (Doctoral dissertation, University of Birmingham). Retrieved, 22 August 2025, from http://etheses.bham.ac.uk/id/eprint/1040/

Peters, B. G. (1991). The politics of taxation: A comparative perspective. Blackwell.

Pettersen, K. I., Reikvam, A., & Stavem, K. (2005). Reliability and validity of the Norwegian translation of the Seattle Angina Questionnaire following myocardial infarction. Quality of Life Research, 14(3), 883–889. http://www.jstor.org/stable/4038837

Phiri, C. S., & Kabaso, P. N. (2012). Taxation of the informal sector in Zambia. Retrieved, 22 August 2025, from https://media.africaportal.org/documents/taxation_of_the_informal_sector_in_zambia.pdf

Prasad, B. (1987). Principles of taxation in ancient India (pp. 66–110). Mittal Publications. https://books.google.co.in/books?id=D7Ql9mX3gqUC&pg=PP7&source=gbs_selected_pages&cad=1#v=onepage&q&f=false

Rakshit, D. (2003). Tax reforms in India and rate structure of personal income tax. The Indian Journal of Commerce, 56(2–3), 130–145.

Rao, M. G. (2000). Tax reforms in India: Achievement and challenges. Asia-Pacific Development Journal, 7(2), 59–74.

Romer, C. D., & Romer, D. H. (2007). The macroeconomic effects of tax changes: Estimates based on a new measure of fiscal shocks. Retrieved, 22 August 2025, from https://eml.berkeley.edu/~cromer/RomerDraft307.pdf

Schneider, F., & Buehn, A. (2018). Shadow economy: Estimation methods, problems, results and open questions. Open Economics, 1(1), 1–29. https://doi.org/10.1515/openec-2017-0001

Shao, J. (2003). Mathematical statistics (2nd ed., pp. 519–520). Springer Science + Business Media, LLC.

Sugarman, N. A. (1948). Estate and gift tax equalization: The marital deduction. California Law Review, 36(2), 223–280.

Sunal, D. W., Wright, E., & Sundberg, C. (2008). The impact of the laboratory and technology on learning and teaching science K-16 (Vol. 3, pp. 126–127). IAP–Information Age Publishing Inc.

Toye, J. (2000). Fiscal crisis and fiscal reforms in developing countries. Cambridge Journal of Economics, 24(1), 21–44. https://www.jstor.org/stable/23600379

Tyagi, M. (1959). Direct taxes administration enquiry committee. Ministry of Finance, Government of India.

Uremadu, S. O., & Ndulue, J. C. (2011). A review of private sector tax revenue generation at local government level: Evidence from Nigeria. Journal of Public Administration and Policy Research, 3(6), 174–183. http://www.academicjournals.org/jpapr

Varadachariar, S. (1948). Income tax investigation commission. Ministry of Finance, Government of India.

Zidar, O. (2019). Tax cuts for whom? Heterogeneous effects of income tax changes on growth and employment. Retrieved, 22 August 2025, from https://www.journals.uchicago.edu/doi/pdf/10.1086/701424