Assertion: Tax reforms in India aimed to reduce the role of the Income Tax Department in regulating the financial sector.

Reason: Tax reforms were focused on simplifying tax procedures and lowering tax rates to encourage compliance and economic growth.

Assertion (A) is not true but Reasoning (R) is correct.

Assertion (A) is not true but Reasoning (R) is correct.

Tax reforms are concerned with the reforms in the government’s taxation and public expenditure policies, which are collectively known as its fiscal policy. It was not intended to reduce the role of IT department.

Tax reforms are concerned with the reforms in the government’s taxation and public expenditure policies, which are collectively known as its fiscal policy. There are two types of taxes: direct and indirect. Direct taxes consist of taxes on incomes of individuals, as well as, profits of business enterprises. Since 1991, there has been a continuous reduction in the taxes on individual incomes as it was felt that high rates of income tax were an important reason for tax evasion. It is now widely accepted that moderate rates of income tax encourage savings and voluntary disclosure of income. The rate of corporation tax, which was very high earlier, has been gradually reduced. Efforts have also been made to reform the indirect taxes, taxes levied on commodities