Financial Literacy and Tax Compliance Behaviour among Young Professionals in India: A Structured Literature Review and Conceptual Framework

Abstract

Background: Financial literacy is increasingly recognised as a form of human capital shaping how individuals plan, save, and meet financial obligations, including statutory tax obligations (Lusardi & Mitchell, 2014, 2023). In India, formal income-tax filing remains limited to a small share of the population (Ministry of Finance, Government of India, 2024), and national surveys report modest levels of financial competence (National Centre for Financial Education [NCFE], 2019). The financial and tax-related decisions of young professionals entering the workforce therefore carry particular significance for household welfare and public revenue mobilisation. While financial literacy and tax compliance have each been studied extensively, largely through survey-based and regression-driven designs, their intersection among young, first-time Indian taxpayers has not yet been systematically consolidated.
Purpose: This review systematically maps and synthesises the scholarly literature connecting financial literacy and tax compliance behaviour, with particular attention to the Indian young-professional segment and proposes an original conceptual framework linking these constructs for future empirical inquiry.
Methodology: This is a Structured Literature Review, informed by the Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR-4-SLR) protocol (Paul et al., 2021), which supplies its organising logic of Assembling, Arranging, and Assessing the literature. No primary data are collected; the review relies exclusively on secondary, peer-reviewed and grey-literature sources, identified through targeted keyword searching and citation tracking rather than an exhaustive, database-coded systematic screening. It identifies the dominant theoretical lenses, including deterrence-based and trust-based models of compliance, along with the demographic determinants and methodological patterns characterising this research space.
Contribution: The review offers a structured evidence map of an underexplored intersection and an original conceptual framework tailored to the Indian young-professional context, with practical implications for tax authorities, financial-education policymakers, and employers designing literacy interventions to improve voluntary compliance among early-career taxpayers.