The study, which will be conducted by economic and tax experts, is also aimed at stopping "commoditisation of tax avoidance schemes".
The latest study comes in the backdrop of Finance Minister Pranab Mukherjee's statement that two groups have been constituted to look into different aspects of black money, including a proposed amnesty scheme to unearth unaccounted wealth.
As per the statement of the proposal put forward by the Income Tax Department, "Complexity and innovation in business structures, new financial products, a large number of taxpayers, growth in international trade supported by rapid expansion of e-commerce, commoditisation of tax avoidance schemes are some of the factors leading to increased compliance risk for the tax administration."
It may not be possible for the Income Tax Department to address these risk factors through the traditional tools based on verification and enforcement action alone, the proposal added.
"Tax compliance costs impose a burden on the taxpayers. If the amount is a big percentage of the tax payable, it deters small and medium taxpayers from being a part of the tax system," it said.
As such, "The challenge before the I-T Department is to ascertain the extent of compliance cost for different categories of taxpayers and develop focused programmes to reduce the compliance costs for improving voluntary compliance," the statement said.
"The study group will strategise to increase direct tax collections and suggest measures to curb tax evasion effectively in the changing business scenario, which includes curbing generation of black money," a senior Finance Ministry official said.
The study group, according to the official draft of the Finance Ministry, will undertake a four-pronged approach to "better understand compliance issues from the perspective of taxpayers".
The group will then make recommendations with respect to the operational decision-making process on the basis of views expressed by affected parties, as well as facilitate participation in the tax system by all segments of taxable citizens. In addition, it will study the barriers to compliance as an ongoing programme and the compliance cost with respect to different categories of taxpayers on a periodic basis.
"The Income Tax department has to pay greater attention to understanding the factors that shape taxpayers' compliance behaviour in order to craft and implement a potentially more effective set of responses.
"The challenge before the Income Tax Department is to identify and assess compliance risks, not only domestically, but also internationally, on the basis of priorities identified with the help of a sound risk management system," the proposal said.
The department will also study the extent of revenue leakage "with clear identification of the activities and the factors responsible for its growth", which will help the I-T Department optimise revenue mobilisation.