Risk analysis & reform in the Indian income tax

Tax risk management has become a critical focus area in the modern economy, as countries increasingly realise the necessity of maintaining a state of comparative tax advantage in a globally integrated financial environment. Starting with a theoretical and international experience perspective, the author identifies some crucial elements and dynamics of tax risk analysis processes adopted in India. Risk initiatives taken by the Indian Income Tax Department (ITD) in recent years are analysed to pinpoint areas where more focus is called for. A policy tool (TCPM) is designed for continuous evaluation of compliance, in order to enable the ITD to achieve comprehensive risk profiling of each taxpayer.