Govt sets up Council to bring consistency in tax policies

In order to bring consistency and streamline the direct and indirect tax policy and administration, the government has set up two new committees -- Tax Policy Research Unit and Tax Policy Council. The new structure is based on the recommendations of the Tax Administration Reform Commission (TARC) that identified 'handling of tax policy and related legislation as one of the areas which needs structural modifications' and suggested the new arrangement.

Finance Ministry has said that 'To bring consistency, multidisciplinary inputs, and coherence in policy making, TARC has recommended that a Tax Council supported by a common Tax Policy and Analysis (TPA) unit should be established to cater to needs of both direct and indirect taxes'.

Tax Policy Council headed by the finance minister will approve broad policy measures to ensure consistency in direct and indirect tax changes based on inputs from the Tax Policy Research Unit (TPRU). The Council will be advisory in nature, which will help the Government in identifying key policy decisions for taxation. It will have nine more members including Ministers of State for Finance and Commerce and Industry, Deputy Chairman, NITI Aayog, Chief Economic Adviser, Finance Secretary as well as Secretaries to the Departments of Revenue, Economic Affairs, Commerce and Industrial Policy and Promotion. The Chairpersons of the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) will be special invitees.

Meanwhile, the TPRU will be headed by an officer of the level of chief commissioner at functional level alternatively from the CBDT and CBEC for a fixed tenure, who will directly report to the revenue secretary. The TPRU will include officials from the CBDT and the CBEC as well as economists, statisticians, operational researchers and legal experts.

TPRU will be a multi-disciplinary body to examine and analyse any fiscal or tax policy referred by the CBDT and CBEC and also prepare and disseminate policy papers and background papers on various taxation issues. It will assist Tax Policy Council in policy decisions and also liaise with State commercial tax departments. For every tax proposal, TPRU will prepare an analysis covering three broad areas - legislative intent behind the proposal; expected change in tax collection; and the likely economic impact through the proposal.