The economic Survey 2019 suggests that the psychological studies can be used in the realm of tax compliance. It is in favour of using religious norms such as 'dying debt is a sin' to improve tax compliance. Identify the related dimension of business environment.

A. Economic
B. Social
C. Technological
D. Legal
E. Political

Choose the correct answer from the options given below:

B & D

The correct answer is option  2- B & D.

The suggestion in the Economic Survey to use religious norms like "dying debt is a sin" to improve tax compliance is related to the Social dimension, as it involves societal beliefs and norms influencing behavior. The Legal dimension is relevant because it touches upon compliance with tax laws and the role of legal frameworks in ensuring adherence to them.

*The social environment of business include the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. Traditions define social practices that have lasted for decades or even centuries. For example, the celebration of Diwali, Eid, Christmas, and Guru Parv in India provides significant financial opportunities for greetings card companies, sweets or confectionery manufacturers, tailoring outlets and many other related business. Values refer to concepts that a society holds in high esteem. In India, individual freedom, social justice, equality of opportunity and national integration are examples of major values cherished by all of us. In business terms, these values translate into freedom of choice in the market, business’s responsibility towards the society and non-discriminatory employment practices. Social trends present various opportunities and threats to business enterprises.

* Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— centre, state or local. It is imperative for the management of every enterprise to obey the law of the land. Therefore, an adequate knowledge of rules and regulations framed by the Government is a pre-requisite for better business performance. Non-compliance of laws can land the business enterprise into legal problems.

Note: Why not economic environment? In this question the focus is not on taxation as a fiscal tool, but on the method used to improve compliance. The Economic environment deals with factors like income levels, inflation, government spending, and overall economic policies. Here, none of these economic variables are being discussed or altered. Instead, the Economic Survey suggests using religious beliefs and psychological norms (such as “dying debt is a sin”) to influence behaviour. This clearly places the emphasis on the social environment, as it involves values, attitudes, and cultural influences. At the same time, tax compliance is about adhering to laws and regulations, which brings in the legal environment. Therefore, although taxation itself is economic, the strategy described is social in approach and legal in purpose, which is why the answer is not economic.