Wednesday, June 18, 2014

TARC key recommendations –Abolition of post of Revenue Secretary, merger of CBDT-CBEC and no retro amendments

Key Recommendation of TARC is as under:

1)Merger of CBDT and CBEC: Taxpayer service delivery will be located under one umbrella for large taxpayers, i.e., the CBDT and CBEC will jointly function for large taxpayers through Principal DG (LBS). For other taxpayers, i.e., medium and small, the operations of the CBDT and CBEC will continue in separate chains;

2)Pre-filled tax returns: Pre-filled tax returns should be provided to all individuals. The taxpayer will have the option to accept the tax return as it is or modify it. In either event, the filing process would be completed with the submission of the tax return electronically.

3)Abolition of post of revenue Secretary: The post of revenue secretary should be abolished. The present functions of the Department of Revenue should be allocated to the two Boards. This would empower the tax departments to carry out their assigned responsibilities efficiently

4)Dispute management: Following recommendations made for dispute management: a)Retrospective amendment should be avoided as a principle.

b)The current practice of raising demands irrespective of merits should be discontinued.

c)The jurisdiction of AAR should be made available for domestic cases also. More benches of AAR should be established at specified locations.

5)Widening the use of PAN: The present PAN should be developed as a Common Business Identification Number (CBIN), to be used by other government departments also such as customs, central excise, service tax, DGFT and EPFO.

6)One Registration for excise and service-tax: Both central excise and service tax should be covered under a single registration as both the taxes are administered by the same department and cross utilisation of credit is permitted between central excise and service tax under the CENVAT credit rules.

7)Filing of return:

a)I-T returns should also include wealth tax return so that the taxpayer need not separately file wealth tax returns. These returns should also be processed together in the CPC at Bengaluru.

b)The disclosures in the return should include a brief mention of the issues on which there has been an on-going litigation between the tax administration This is to protect taxpayers from allegation of non-disclosure, suppression, escapement of income, etc., which often results in the initiation of penal provisions.

8)Constitution of centralized processing units of CBEC: The CBEC should set up centralized processing units in line with the CPC, Bengaluru, and CPC-TDS at Ghaziabad for processing central excise and service tax returns.

9)Single return for service tax and excise: There should be a common return for excise and service tax.

10) TDS:

a)The insistence on manual filing of TDS certificates before AO for verification of refunds claim should be done away with.

b)The CPC-TDS should allow correction in the name of the deductees to avoid multiple submissions of TDS forms.

c)Once TDS is deducted from a payment, TDS should get credited to the taxpayer’s account. This should be like an account with running balance, to be utilized by the taxpayer at his option to set off his tax liabilities.


a)Refunds sanctioned should be paid along with the applicable interest automatically as is done in the case of income tax and not on demand by the taxpayers.

b)As in the case of direct taxes and customs duty drawback, the refund and interest payment should be directly credited to the bank account of the taxpayer.

c)The rate of interest on refunds should be the same as the interest charged by the tax department. This would ensure equity between the two interests and would not disadvantage the taxpayer unduly.

12)Foreign Tax credit (‘FTC’): The CBDT should come out with clear FTC guidelines, which should also cover the timing differences between different tax jurisdictions.