“Ease of living” is a phrase the government frequently uses, much like “ease of doing business”. Yet, for individual taxpayers, the lived reality often feels quite different.
From April 2026, a new income-tax law will come into force. While businesses have long flagged the burden of tax compliance, non-business taxpayers—salaried individuals, investors and retirees—face their own compliance maze.
They need to maintain detailed records of accounts that must be kept for long periods. If your income exceeds ₹50 lakh (raised to ₹1 crore since last year), the tax returns require you to disclose the cost of certain types of assets held by you.
Such assets include shares and securities, loans and advances given, bank balances, immovable property, vehicles, jewellery, etc. This is generally not possible without maintaining detailed records, if not books of account. Often, in assessments, you may be asked for a personal balance sheet, though you are not required to maintain accounts by law.
If you are an investor in shares, you need to keep detailed records of the cost and date of purchase of each lot of shares, along with a copy of the contract note, so as to be able to compute your capital gains when you sell the shares, as such gains are computed on the basis of first-in, first-out or basis.
For investors with large portfolios, keeping track of this is quite time-consuming. Often, such details are provided by portfolio managers or online stock brokers. However, if you have shifted brokers or portfolio managers over the years, extracting such accurate information is a big challenge.
The contract notes need to be kept till such time as the shares are sold and assessment of income for that year is completed, unless the shares were acquired prior to a cut-off date (e.g. pre-February 2018 for listed shares) where you can take value as on that cut-off date as the cost.
In case of immovable property, you need to keep not only the purchase deed but also proof of other expenses incurred, which would form part of the cost, such as brokerage, legal fees, transfer fees, etc., as these may be called for to verify the capital gains when you sell the property.
At times, tax officers ask for bank statements reflecting payments for the purchase of the property, which are generally impossible to produce after a couple of decades later.
If you have foreign assets, you need to ensure absolute accuracy with complete and proper records—a small mistake or omission could attract a penalty of ₹10 lakh under the Black Money Act. To claim credit for foreign taxes deducted or paid on your overseas income, you have to file Form 67 to avail such credit along with proof of payment or deduction of such tax.
The draft rules propose obtaining a certificate from a CA for claim of such tax credit, adding to the burden on . Similarly, complete details are needed for crypto assets to ensure proper disclosure.
You need to have full knowledge of all the deposits in your bank account. During assessment, in case you do not recollect the source or details of a particular deposit, or are not able to back up your explanation with evidence, the amount can be added as an unexplained cash credit and taxed at a higher tax rate plus a penalty.
Therefore, many taxpayers prefer to maintain books of account, as remembering the nature of a transaction after a few years is challenging even for someone with an excellent memory.
You need to retain your bank statements, , salary certificates, sale agreements and contracts, at least for a period of six years from the end of the year to which they relate, as that is the time limit within such reassessment can be initiated.
For recent years, fortunately, TDS certificates need not be retained, as the tax deducted at source (TDS) is generally reflected in Form 26AS on the tax portal. While digitisation has eased storage concerns, it has not reduced the underlying compliance expectations.
Despite repeated assurances of simplification, compliance burden for individuals have not eased. Given the heavy burden placed on taxpayers over recent years without clarification on whether this process was actually undertaken, perhaps it is time to thoroughly examine this matter—most efforts at simplification in the past have resulted in more complications.
Equally concerning is the tendency to rely on committees dominated by tax administrators, with limited representation from taxpayers. Meaningful simplification will require a shift in approach—one that recognises the impact of compliance demands and actively incorporates taxpayer feedback.
Gautam Nayak is a partner at CNK & Associates LLP. Views are personal.