The Tax Administration
Reforms Commission’s (TARC) first report is an incisive assessment of the existing tax policy, particularly its functioning and the key behavioural aspects with reference to the ‘risk averse’ approach of the administration. Besides recommending a slew of bold reform measures to align the tax policy with contemporary best international practices, the report has been critical of the current practices and how their evolution over the past decade has not kept pace with reforms in other segments of the economy. The commission was exclusively mandated to review application of tax policies and laws in the context of global tax practices and recommend measures to enhance efficiency and effectiveness of tax services. Six focus groups constituted by the commission, comprising experts from the tax administration and other tax professionals, undertook in-depth analysis of various aspects of the terms of reference and made recommendations after intensive discussion with stakeholders including the field officers and taxpayers. Having participated in focus group debates, I can vouch for the non-partisan approach coupled with the candour with which field officers highlighted the challenges they face in their day-to-day functioning.
At the macro level, the TARC findings reveal the alarmingly vulnerable state of the tax administration, calling for immediate fundamental reforms in the organisational structure and setting down medium- to long-term objectives for ushering in strategic and structural reforms to enable a world-class service experience for the taxpayer under a unified management structure. Unlike expert committees in the past, which focused upon tax policy, the TARC report unequivocally emphasises upon administrative practices and its significance on holistic implementation (what the commission vehemently describes as fully implementable solutions, provided the legislature and the executive demonstrate strong willpower). It has opposed any form of cherry-picking.
From a structural and governance standpoint, delineation of the functional and financial autonomy for two boards of central taxes, CBDT and CBEC, is a huge step forward in restructuring the revenue functions of the government (the department of revenue). I have no hesitation in concurring with the commission’s recommendation to reorient the role and enhance autonomy for two boards, paving the way for the evolution of a unified management structure for all central taxes under CBDT and CBEC. Such convergence can be initiated in the form of selective immediate integration of common functions (e.g., human resource, vigilance, infrastructure and logistics, compliance verification, etc) and steadily culminating in a complete integration over next