The Taxman Cometh: Behavioural Approaches to Improving Tax Compliance in India

Abstract

Academics and policymakers are increasingly looking to understand the underlying behavioural motives for tax compliance in developing and developed countries. Contemporary models of tax compliance view the decision to evade as an act of dishonesty, and experimental approaches have tested the impact of social norms in influencing such behaviour. India is a prime avenue to explore such an intervention given the lack of past research in this area as well as recent policy focus on curbing tax evasion and widening the tax base. This paper provides an adapted behavioural intervention for curbing tax evasion in India tailored for its unique socio-cultural context. We outline the experimental design and potential challenges in implementation. Implications for policy and potential areas of government intervention are provided, such as adopting a stance of legitimate power that aims to build trust among citizens and the government, and improve tax morale.