GS-3, Indian Economy, Uncategorized

Two committees to ensure consistency in tax policies

The Union Government has constituted two new committees:

  1. Tax Policy Research Unit (TPRU)
  2. Tax Policy Council (TPC)
  • Aim: To streamline the taxation policy and administration
  • These committees have been constituted based on the recommendation of the Tax Administration Reform Commission (TARC)

Tax Policy Research Unit

  • The TPRU will be headed by Revenue Secretary
  • It will carry out studies on various topics of fiscal and tax policies
  • It will assist the TPC in taking appropriate policy decisions and shall prepare tax proposal and analysis of legislative intent
  • It will also take decisions on expected increase or decrease in tax collection and economic impact
  • It will comprise of officers from CBEC, CBDT as well as economists, researchers, statisticians and legal experts

Tax Policy Council

  • The TPC will help the government in identifying key policy decisions for taxation
  • It shall aim to have a consistent and coherent approach to the issue of tax policy
  • It will look at all the research findings coming from TPRU and suggest broad policy measures for taxation
  • The council will be headed by Union Finance Minister
  • It shall have 9 members – Minister of State for Finance, Commerce Minister, NITI Aayog Vice-Chairman, Chief Economic Advisor and Finance Secretary
  • It would also have secretaries from the department of Revenue, DEA, DIPP and Ministry of Commerce

Background:

  • Presently, taxation policy and administration is handled in the CBDT and the CBEC
  • But there are also two independent boards Tax Research Unit (TRU) and Tax Policy and Legislation (TPL) wings which are also sending proposals to the Union Finance Minister
  • TARC in its First Report had identified handling of tax policy and related legislation as one of the areas in need of structural modifications
  • In order to bring consistency, multidisciplinary inputs and coherence in taxation policy making, it had recommended establishment of Tax Council supported by a common Tax Policy and Analysis (TPA) unit to cater to needs of both direct and indirect taxes

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