Accepting compliments can be hard. Nevertheless, you do not want to come off as conceited and you also do not want to refuse accepting the compliment.
When someone tells you your outfit or whatever looks nice just say thank you and smile. Just because someone gave you a compliment does not mean you have to give one back. Whether you think the compliment was sincere or not or whether you even agree with what the person has said to you, still just say thank you.
Not accepting the compliment can make the situation a little awkward. No one wants to fight with you on how pretty you look. The worst thing you could possibly say when accepting a compliment is “I know.” That will make you look very conceited and that person will probably not want to give you another compliment again. The safest route is to just say thank you and smile; if the person cared enough to compliment you, be gracious enough in acknowledging it.
It’s only good manners.