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Revenue Dept to focus on behavioural patterns of taxpayers to improve GST compliance

Soon, GST officers will study the behavioural pattern of certain taxpayers to nudge them to comply with tax laws, in a departure from the current practice of focussing only on deterrent action to check evasion. The Central Board of Indirect Taxes and Customs (CBIC) has set up a ‘Nudge Team’ to formulate a strategy on studying behavioural patterns of taxpayers and use segmented approach to encourage them to pay taxes, an official said.

The plan is based on ‘behavioural interventions’ or ‘non-deterrence approach’ adopted by countries like the UK, Australia, and Mexico to frame policies and increase tax collections.

“On the basis of the behavioural pattern, the department will segregate taxpayers into different categories like ‘disengaged’, ‘resisters’, ‘triers’ and ‘supporters’,” the official told agencies.

Elaborating on the plan, the official said that in cases of non-wilful defaulters, the tax department would adopt a soft approach to persuade them to comply with tax laws by sending them personalised emails reminding them about the default in tax payment cycle.

Efforts will also be made to educate these taxpayers about provisions like payment of taxes in instalments in case of liquidity crunch, and other benign provisions of the tax laws to enable them to comply with statutory provisions.

Those who do not comply with tax laws and deliberately evade their responsibility would be categorised as ‘disengaged’, while those who view the system as oppressive but can be persuaded if their concerns are addressed will fall under the category of ‘resisters’.

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