Government sets up tax reform commission

The government Monday set up a commission under the chairmanship of Parthasarathy Shome, advisor to finance minister, to suggest reforms in tax administration aimed at widening the tax base and enhancing compliance.

The "Tax Administration Reform Commission" has been asked to submit its report and recommendations within 18 months, the finance ministry said in a statement.

The commission has six members - two full-time and four part-time. As chairman of the commission, Shome will enjoy the rank of minister of state.

The commission will "review the existing mechanism and recommend measures for deepening and widening of tax base and taxpayer base," according to the terms of reference of the commission.

"To review the existing mechanism and recommend a system to enforce better tax compliance - by size, segment and nature of taxes and taxpayers, that should cover methods to encourage voluntary tax compliance," it said.

Finance Minister P Chidambaram in his budget speech for 2013-14 presented in February had announced the government's intent of setting up the commission.

"An emerging economy must have a tax system that reflects best global practices. I propose to set-up a Tax Administration Reform Commission to review the application of tax policies and tax laws and submit periodic reports that can be implemented to strengthen the capacity of our tax system," Chidambaram had said.