Parliamentary panel flags ‘punitive’ tax regime, seeks data on new Income Tax Act’s Impact
A parliamentary panel has criticized the current Indian income tax regime for its punitive nature and excessive official overreach. The committee is seeking further data on the impact of the Income Tax Act, 2026, while also noting concerns regarding the balance between individual and corporate tax contributions.
Why it matters
The critique highlights ongoing tensions between government revenue collection strategies and taxpayer rights, which can significantly impact economic compliance and business sentiment.
Members of the Parliamentary Standing Committee on Finance, cutting across party lines, criticised the present Income Tax regime for relying excessively on what they described as “punitive action” and granting tax officials significant scope for overreach, at a meeting on Thursday (September 3, 2026).
The panel, headed by BJP MP Bhartruhari Mahtab, met to discuss “Direct Tax Reforms: Simplification, Rationalisation and Ease of Compliance” with representatives of the Department of Revenue in the Finance Ministry and the Central Board of Direct Taxes (CBDT).
The committee also flagged compliance-related glitches in the implementation of the Income Tax Act, 2026, and sought additional information from the CBDT on its impact, including changes in tax revenue collections, the number of assessees, and the volume of pending litigation.
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