The Centre has constituted a tax administration reform commission (TARC) under the Chairmanship of Parthasarathi Shome.
As head of the TARC, Shome, now an advisor to the Finance Minister, will have the rank of Minister of State.
The TARC is expected to review the application of tax policies and laws and submit periodic reports that can be implemented to strengthen the tax system.
This commission will have tenure of 18 months. It will comprise two full-time members — Y.G.Parande and Sunita Kaila — and four part-time members — M. K. Zutshi, S. S. N. Moorthy, M. R. Diwakar and S. Mahalingam.
While announcing the setting up of TARC in his Budget speech this year, Finance Minister P. Chidambaram had said that an emerging economy must have a tax system that reflects best global practices.
The TARC has now been tasked with reviewing the existing business processes of tax governance including the use of information and communication technology and recommend measures for tax governance best suited to Indian context.
It will also review the existing mechanism of dispute resolution covering time and compliance cost and recommend measures for strengthening the same.
This includes domestic and international taxation. In all, the terms of reference to the commission has 12 action points.
An interesting point relates to recommending measures for deepening and widening of tax base and taxpayer base.
The TARC has also been asked to review the existing mechanism and recommend measures for improved taxpayer services and taxpayer education programme.
This will include mechanism for grievance redress, simplified and timely disbursal of duty drawback, export incentives, rectification procedures, and tax refunds.
Also, the TARC will recommend a system of enforcing better tax compliance — by size, segment and nature of taxes and taxpayers, that should cover methods to encourage voluntary tax compliance.
The Commission will recommend capacity building measures for preparing impact assessment statements on taxpayers’ compliance cost of new policy and administrative measures of the tax department.