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The Determinants of Tax Morale in India

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  • Korgaonkar, Chinmay N

    (Indian Revenue Service (Income Tax))

Abstract

This is a study of tax morale in India. The concept of tax morale or the citizens' attitude towards tax compliance is vital for the design and implementation of fiscal policy. Tax morale can foster voluntary compliance and hence support the enforcement and deterrence-driven approaches of the tax agencies. However, limited literature regarding the tax morale of Indian citizens is available. The present paper tries to bridge the gap by analyzing the available data for India from the 5 waves of the World Values Survey (1990-2014). Treating tax morale as a dependent variable, this study estimates the factors influencing it. We show that the trust in government, parliament, and civil services positively affects the tax morale of Indian citizens. The correlation between trust in the legal system and tax morale was also positive but not significant. Among the socio-economic variables, education improves the intrinsic motivation of individuals towards tax compliance. Interestingly, the full-time/salaried persons have lower tax morale as compared to the self-employed employees. This finding has important policy implications, given that the full-time/salaried class contributes a significant share of the total taxes paid by the individual taxpayers in India.

Suggested Citation

  • Korgaonkar, Chinmay N, 2022. "The Determinants of Tax Morale in India," Working Papers 22/381, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:22/381
    Note: Working Paper 381, 2022
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    References listed on IDEAS

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    1. Rao, R. Kavita, 2022. "Income Tax data and Facets of transparency," Working Papers 22/384, National Institute of Public Finance and Policy.

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    Keywords

    Tax Morale ; Tax Compliance ; India ; Fiscal Policy ; Self-employed ; Salaried;
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