The government has set up a tax policy research unit and tax policy council to bring about consistency and coherence in policy making, using multidisciplinary inputs. The move is in line with the recommendations of the Tax Administration Reform Commission (TARC).
The tax policy council is being set up with the finance minister as its chairman with nine other members, including minister of state for finance, deputy chairman of NITI Aayog, minister of state for commerce and industry, finance secretary, department of economic affairs secretary, revenue secretary, commerce secretary, department of industrial production and planning secretary and chief economic advisor to the finance minister.
The chairman of CBDT and chairman of CBEC will be special invitees.
The taxation reform panel, in its first report, has identified handling of tax policy and related legislation as one of the areas which needs structural modifications. Observing that currently, this is handled in the two boards, ie, CBDT and CBEC, independently, 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.
The panel proposed setting up of Tax Research Unit (TRU) and Tax Policy and Legislation (TPL) wings comprising tax administrators, economists, and other specialists such as statisticians, tax law experts, operation research specialists and social researchers for both the boards
These units will carry out studies on various topics of fiscal and tax policies referred to it by CBDT and CBEC and provide independent analysis on such topics.
Considering the above, the government has created a Tax Policy Research Unit (TPRU) and Tax Policy Council.
The Tax Policy Research Unit (TPRU) will be a multi-disciplinary body with the following objectives:
- Carry out studies on various topics of fiscal and tax policies referred to it by CBDT and CBEC and provide independent analysis on such topics;
- Prepare and disseminate policy papers and background papers on various tax policy issues;
- Assist Tax Policy Council chaired by finance minister in taking appropriate tax policy decisions; and
- Liaise with state commercial tax departments.
For this purpose the TPRU may also interact with various research institutions, wherever necessary. The TPRU will prepare for every tax proposal an analysis covering the following three points:-
- The legislative intent behind the proposal, ie, why this proposal is being framed and what is the policy objective;
- Expected increase or decrease in tax collection through the proposal; and
- The likely economic impact (positive or negative) through the proposal (other than the effect on tax collection).
Tax Policy Research Unit (TPRU) will comprise of officers from the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) as well as economists, statisticians, operational researchers, legal experts. Member (L&V), CBDT and member (budget), CBEC will be the link officer between TPRU and CBDT and CBEC.
The unit will be headed by an officer of the level of chief commissioner at functional level alternatively from CBDT and CBEC for a fixed tenure, who will directly report to the revenue secretary.