Archive · 9 Sep 2025
India's Indirect Tax Body Shifts to 'Soft Nudge' Approach for Compliance
Imagine the tax department wants everyone to pay their taxes correctly.
Instead of being harsh, they're now being gentle.
They'll check if the money you report to the tax office matches what you report for goods and services.
If something seems off, they'll give you a friendly reminder before taking action.
This new approach focuses on helping businesses understand the rules and pay taxes properly, especially with the growing use of digital payments.
It's like a nudge to help everyone do the right thing and contribute to the country's funds.
CBIC is adopting a 'soft nudge' approach to encourage indirect tax compliance.
The tax department will cross-reference GST returns with income tax returns to check for discrepancies.
Authorities are cautious about using digital transaction data, like UPI, for enforcement.
₹7 trillion of GST evasion was detected in the last five years.
The goal is to expand the tax base and boost government revenues through increased compliance.
- Who
- The Central Board of Indirect Taxes and Customs (CBIC) of India.
- What
- Is implementing a 'soft nudge' approach to improve indirect tax compliance.
- When
- Currently, in the financial year.
- Where
- India.
- Why
- To build trust with businesses, encourage voluntary compliance, and increase tax revenue.
- GST Evasion Detected
- ₹7 trillion in 91,000 cases (5 years to March 2025)
- ITC Fraud Detected
- ₹1.78 trillion
- GST Registration Threshold
- ₹40 lakh (within state), ₹20 lakh (cross-border)
- FY25 GST Collection
- ₹22.08 trillion (record)
- Estimated cost of GST cuts
- ₹48,000 crore