New Delhi: As a step towards fundamental Tax administration reform, and following widespread international practice, the present structure of the CBDT and CBEC should be unified and converged in the next five years in governance, vision, mission and approach to tax policy formulation and administrative delivery to taxpayers, anchored in a more unified management structure, so that it is able to respond to emerging challenges quickly and positively.
This has been recommended by the Tax Administration Reform Commission (TARC) in its report “Tax Administration Reform in India-Spirit, Purpose and Empowerment” Submitted to Union Finance Minister Arun Jaitley today.
The report of TARC, comprising of Dr. Parthasarathi Shome, Chairman, Y. G. Parande Sunita Kaila, M. K. Zutshi, S. S. N. Moorthy, S. Mahalingam and M. R. Diwakar, all of them members, points out:
- There has been inadequate focus on delivery to the taxpayers by the two tax departments, the CBDT and CBEC, and almost no visible change in the approach to dealing with them.
- It is time that the Indian tax administration improves its delivery mechanism to the taxpayers by recognising and understanding the needs of each taxpayer segment.
- Indian tax administration has more disputes than any other by far.
- Currently, little meaningful analysis is carried out by the Tax Policy and Legislation (TPL) and Tax Research Unit (TRU) of the CBDT and CBEC, respectively, which would stand the test of international comparisons.
The report underscores that Tax law making is required to be carried out with a more consistent and coherent approach in a joint Tax Policy and Analysis (TPA) wing of the two Boards with enhanced research. The TPA should have multidisciplinary inputs and data analysis, so that tax laws, which are an important instrument of fiscal policy, reflect that character. The present silo working, the units of the two Boards working independently and reaching the Finance Minister in separate channels, does not achieve this basic objective. It defeats the objective of achieving ease of doing business on the one hand, and consolidating the investigation function on the other.