Individual Corruption

Citizens report that corruption thrives within the Income Tax Department. According to Transparency International Global Corruption Barometer 2010, more than half of the surveyed households who had contact with tax revenue departments in 2009 reported having paid a bribe.

Business Corruption

According to Global Integrity 2009, companies frequently interact with tax officials, who visit plants to carry out inspections. These officials enforce the complex tax rules and regulations relevant for business operations and enjoy considerable discretion in deciding which rules to enforce, to whom these rules should apply, and when and how they should be used. Moreover, companies report that inspection visits are often arbitrary and excessive, at times serving as avenues for demanding bribes. Many companies choose to pay off tax officials in order to avoid disruptions in production schedules and staff time. Consequently, the majority of companies surveyed in the World Bank & IFC Enterprise Surveys 2006 report that they give gifts in their meetings with tax inspectors.

Moreover, according to Global Integrity 2009, some groups, such as well-connected individuals or companies, may consistently avoid paying taxes due to their connections.

Political Corruption

Tax evasion by politicians, bureaucrats and businesspeople in India is common. According to a 2008 article by Merinews, a sum of more than USD 1.4 trillion has been deposited in Swiss banks into personal accounts belonging to Indians. Allegedly, most of this wealth is misappropriated public money and has been acquired through corrupt means, leading to demands for the money to be returned to India for debt and poverty relief. According to a January 2011 news article by Global Post, in 2008, the Government of Germany offered its help to share information with India concerning some wealthy Indians who hold secret accounts in the tax haven of Liechtenstein, however, the Indian government was initially reluctant to accept the offer, and only finally accepted the offer after public pressure. According to the article, the Supreme Court and the opposition parties have been heavily criticising the government for keeping the list of the tax evaders’ names secret from the public and failing to launch actions against them. A Supreme Court lawyer alleged that the government is either ‘protecting their own party members or the corporations who have bribed them’, according to the same article.

Frequency

The World Bank & IFC: Doing Business 2012:
- A medium-size company operating in India must make an average of 33 payments to the tax authorities each year, taking an average of 254 hours.

- The total tax rate as percentage of profit is nearly 62%.

Transparency International: Global Corruption Barometer 2010:
- 51% of households who had contact with tax revenue services throughout 2009 report to have paid a bribe.

Trace International: Business Registry for International Bribery and Extortion – India Report 2009:
 - Of the total reported bribe demands at the national level between July 2007 and October 2008,  13% originated from the national office of taxation.

Transparency International: Bribe Payers Index 2008:
- Business executives give the tax revenue authorities a score of 3.1 on a 5-point scale (1 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2006:
- 52% of companies report that they expect to give gifts in meetings with tax inspectors.

- Over 21% of companies identify tax administration as a major constraint to doing business.

- Over 59% of companies report that a typical company reports less than 100% of its sales for tax purposes.