With a view to bring about consistency in taxation policy, Finance Ministry today set up two committees - one under Finance Minister and other under Revenue Secretary.
While the Tax Policy Council (TPC) under the Finance Minister will take important policy decisions, the Tax Policy Research Unit (TPRU) under Revenue Secretary will be a multi disciplinary body.
TPRU will carry out studies on various topics of fiscal and tax policies and assist the TPC in taking appropriate policy decisions.
The two committees would start functioning from April 1, 2016, Revenue Secretary Hasmukh Adhia said in a tweet.
"TPRU will prepare for every tax proposal an analysis of legislative intent, expected increase/decrease in tax collection and economic impact," a Finance Ministry statement said.
Under the current structure, Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) are assisted by a Tax Research Unit (TRU) and Tax Policy and Legislation (TPL), respectively. Taxation proposals of the two boards are sent to the Finance Minister separately.
"To bring consistency, multidisciplinary inputs and coherence in policy making, the TARC had suggested 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," Finance Ministry said.
The Tax Administrative Reforms Commission (TARC) under Parthasarathi Shome had submitted four reports to Finance Minister on taxation reform.
The Finance Ministry today said under the revamped structure, TPRU will comprise of officers from both CBDT, CBEC as well as economists, statisticians, researchers and legal experts.
The TPC, to be headed by Finance Minister, would have nine members - Minister of State for Finance, NITI Aayog Vice-Chairman, Commerce Minister, Chief Economic Advisor and Finance Secretary. It would also have secretaries from the department of Revenue, DEA, DIPP and Ministry of Commerce.
The TPC aims to have a consistent and coherent approach to the issue of tax policy and will look at all the research findings coming from TPRU and suggest broad policy measures for taxation, the Ministry said.
"The TPC will look at all the research findings coming from TPRU and suggest broad policy measures for taxation. The Council will be advisory in nature, which will help the Government in identifying key policy decisions for taxation," it added.
The TARC in its first report had said that handling of tax policy and related legislation is one of the areas which needed structural modifications.
"Litigation is a scourge for a tax-friendly regime and
creates an environment of distrust in addition to increasing the compliance cost of the tax payers and administrative cost for the government," Finance Minister Arun Jaitley had said in his Budget speech.
With the black money Income Disclosure Scheme now picking pace and senior officers in place to take the IDS forward, the CBDT has started focusing on the dispute resolution scheme, which was announced by Jaitley in 2016-17 Budget.
"Since the time frame for disclosure under IDS was to end on September 30, the CBDT decided to focus on it first. Now that IDS has been put on track, officers want to ensure that the dispute resolution scheme becomes a resounding success," the official added.
Besides, the department is planning to create a dedicated corner containing the details of the scheme, rules, forms and FAQs relating to dispute resolution scheme on its website.