The government will launch TARC (Tax Administration Reform Commission) suggested reforms in the next budge. Finance Minister Arun Jaitely has indicated that the Parthasarathi Shome led TARC’s work for both direct nd indirect taxes will be start implemented soon.
The TARC was appointed by the government in 2013. Idea behind TARC formation was that future tax revenue augmentation will be based on better administration.
The Commission, appointed in 2013 has made four reports. Some of the suggested measures were aimed at ensuring better compliance from tax payers.
The TARC has looked into several issues including the narrow direct tax base and the large number of exemptions that make the tax system of the county a ‘tax jungle.’
Adding wealth details to tax statement is one of them.
Dr. Shome who chaired a Committee on GAAR few years back, has made several recommendations on reforms to be implemented to adjust with global trends. In its third Report, the TARC provides guidelines for tax information exchange.
Another indirect observation of the TARC in its First Report was that the revenue officials need not issue indiscriminatory tax notices to companies and thus tarnishing the image of the country.
The TARC’s recommendations support prospective taxation. Hence, the FM may opt for prospective taxation for the Income Tax Amendment that made the transfer of a foreign company’s underlying Indian assets taxable (Vodafone issue).