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Shome Panel on Tax Administration submitted its report to Union Ministry of Finance

Jun 18, 2014 18:27 IST

The Tax Administration Reform Commission (TARC) headed by Parthasarathi Shome submitted its report to the Union Ministry of Finance on 15 June 2014. The Shome Panel has recommended abolition of the post of Revenue Secretary and merger of CBDT and CBEC among others.

Recommendations

  • A separate budget allocation is recommended to ensure time-bound tax refund and a passbook scheme for Tax Deduction at Source (TDS).
  • The retrospective amendments to tax laws should be avoided as a principle and Income Tax Return should also include wealth tax details.
  • The present functions of the Department of Revenue should be allocated to the two Boards (CBDT and CBEC). This will empower the tax departments to carry out their assigned responsibilities efficiently.
  • Two Boards (CBDT and CBEC) should move towards a unified management structure with common Board for both direct and indirect taxes called the Central Board of Direct and Indirect Taxes. This selective convergences of two Boards will achieve immediate better governance and in five years.  
  • An Independent Evaluation Office should be set up to monitor performance of the tax administration, promote accountability, evaluate the impact of tax policies and assess all factors that affect tax administration.
  • The tax administration should have greater functional and financial autonomy and independence from governmental structures.
  • The revenue secretary, an IAS, is likely to have little experience or background in tax administration at the national level and should have familiarity with tax. Thus, it should be abolished.
  • Permanent Account Number (PAN) should be developed as a common business identification number (CBIN). It is to be used by other government departments also such as customs, central excise, service tax, DGFT and EPFO.
  • Both central excise and service tax should be covered under a single registration as both the taxes are administered by the same department and cross utilisation of credit is permitted between central excise and service tax under the CENVAT credit rules.  It is also necessary to provide for de-registration, cancellation or surrender of registration numbers and PAN.
  • A tax council is to be set up headed by the chief economic advisor in the finance ministry to develop a common tax policy, analysis and legislation for both direct and indirect taxes.
  • Each rule, regulation and other tax policy measure such as exemptions should be reviewed periodically to see whether they remain relevant to the contemporary socio-economic conditions and meet the changing requirements.
  • A minimum of 10 per cent of the tax administration's budget must be spend on taxpayer services. At least 10 per cent of the Budget should be allocated and spent for information and communication technology-based taxpayer services. It also recommended providing pre-filled tax returns to all taxpayers.

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