FM Sets Up Shome Commission for Reform of Tax Admin with Two Retired CBDT and CBEC Officers as Full Members

• More Controls on Tax Payers in the Offing

• Commission Term of 18 months to overlap with New Govt at Centre Due in Six Months

• No Representation to Professionals, Lawyers and Small Size Users

The Tax Administration Reform Commission (TARC), set up by the Finance Ministry to suggest measures to prevent economic offences among other things, is expected to submit its first report in six months, TARC Chairman and Advisor to Finance Minister Parthasarathi Shome said here on 21 October. Reports will follow after every three months.

The term of the 7-member TARC is 18 months, and it will work as an advisory body to the Ministry of Finance.

The statement said the Commission will be supported by a Secretariat and have its headquarters in Delhi. It will be provided information and quantitative data of CBDT and CBEC to do statistical analysis for making recommendations.

“An emerging economy must have a tax system that reflects best global practises. I propose to set up a TARC to review the application of tax policies and tax laws and submit periodic reports that can be implemented to strengthen the capacity of our tax system,” Finance Minister P Chidambaram had said in his budget speech.

[Press Release dated August 26, 2013]

In his Budget Speech 2013-14 in the Parliament on 28.02.2013, the Finance Minister had announced as under:

“An emerging economy must have a tax system that reflects best global practices. I propose to set-up a Tax Administration Reform Commission to review the application of tax policies and tax laws and submit periodic reports that can be implemented to strengthen the capacity of our tax system.”

Accordingly, the government has set-up a Tax Administration Reform Commission (TARC). The term of the Commission will be 18 months. The Chairman of the Commission is Dr. Parthasarathy Shome and will be in the rank of Minister of State.

The Members of the Commission are as follows:

Full- Time Members: 2

Shri Y.G. Parande; Ms. Sunita Kaila

Part-time Members: 4

Shri M.K. Zutshi; Shri S.S. N. Moorthy; Shri M.R. Diwakar

Shri S. Mahalingam

The Terms of Reference of the Commission will be as follows:-

• To review the existing mechanism and recommend appropriate organizational structure for tax governance with special reference to deployment of workforce commensurate with functional requirements, capacity building, vigilance administration, responsibility and accountability of human resources, key performance indicators, assessment, grading and promotion systems, and structures to promote quality decision making at the highest policy levels.

• To review 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.

• To 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.

• To review the existing mechanism and recommend capacity building measures for preparing impact assessment statements on taxpayers compliance cost of new policy and administrative measures of the tax Departments.

• To review the existing mechanism and recommend measures for deepening and widening of tax base and taxpayer base.

• To review the existing mechanism and recommend a system to enforce better tax compliance - by size, segment and nature of taxes and taxpayers, that should cover methods to encourage voluntary tax compliance.

• To review the existing mechanism and recommend measures for improved taxpayer services and taxpayers education programme. This includes mechanism for grievance redressal, simplified and timely disbursal of duty drawback, export incentives, rectification procedures, tax refunds etc.

• To review the existing mechanism and recommend measures for “Capacity building” in emerging areas of Customs administration relating to Border Control, National Security, International Data Exchange and securing of supply chains.

• To review the existing mechanism and recommend measures for strengthening of Database and Inter-agency information sharing, not only between Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs(CBEC) but also with the banking and financial sector, Central Economic Intelligence Bureau (CEIB), Financial Intelligence Unit (FlU), Enforcement Directorate etc. and use of tools for utilization of such information to ensure compliance.

• To review the existing mechanism and recommend appropriate means including staff resources for forecasting, analysis and monitoring of revenue targets.

• To review the existing policy and recommend measures for research inputs to tax governance.

• To review the existing mechanism and recommend measures to enhance predictive analysis to detect and prevent tax/economic offences.

• Any other issue which the government may specify during the tenure of the Commission.