Relevant committee reports on Indirect Taxation

2.  Indirect taxes are the most important source of
revenue in India. It contributes the majority of total
revenue to the government.
 It includes taxes levied on excise, customs, services,
entertainment taxes, electricity duties, and the tax
on passenger fares and freights.

3.  Earlier, the government focused more on Direct Taxes,
Especially, Income Tax.
 Comparatively less attention to Indirect Taxes.
 Earlier Committees :
Tax Reform Committee (1953)
- headed by Dr. John Mathai
Indian Tax Reforms Committee (1956)
- headed by Prof. Kaldor
Direct Taxes Enquiry Committee
- headed by Mr. K.N. Wanchoo

4. Main Report was on
“Rationalisation &
Simplification of Direct
Taxation in India”
Suggestions for Indirect
Taxes
 General excise levy of
10% on all products.
 Simplification of
Customs rates.

5.  Headed by Mr. Laxmi
Kant Jha
 Former Governor of
Reserve Bank of India

6. Suggestions
 Rationalization of the duty structure on final products
such that progression could be achieved.
 Rationalization of the rates of duties on raw materials.
 Introduce the VAT system in Excise duty.

7.  No action by the government till 1986.
 Later, some changes have been introduced to
simplify and rationalize the structures
 In 1986, MODVAT scheme was introduced.
 Attempt to bring ‘Ad velorem’ duty
- but these cannot be considered
comprehensive

8.  Headed by Raja
Chellaiah
-- was the
Chairman of National
Institute of Public Finance
Policy.
 “Father of India’s Tax
Reforms”

9.  Introduce Service Tax
 Significant
rationalisation of the
tax structure,
particularly the
exemptions.
 Reduction in the no.
of rates and widening
of tax base.
 Effective
administration
 In the long-run, adopt
VAT scheme at the
manufacturing level
 To make VAT simple
& easily adminstrable,
it should be levied at
2 or 3 stages
 Rationalisation of the
system with abolition
of some exeptions &
concessions.

10.  Reduce the import
duties
 Implimentation of
LPG policy in India
 Reforms in
administration &
enforcement of both
direct & indirect taxes
 Reduce the rate of
Corporate Tax
 Reduce the rate of
Marginal Tax
 Decrease the share of
trade taxes in the total
tax revenue

11.  Most of the suggestions were accepted by the
government in the 1993-94 Budget
 Service tax was introduced in the year 1994
 CENVAT replaced the MODVAT in 2000
 During the period1992-97,the excise duty
structure was modified to gradually reduce the
high rates of duties on several commodities
 Introduced the concept of charging excise duty
on the basis of in the year 1997.

12.  Chaired by Vijay
kelkar
 The then Advisor to
the Ministry of
Finance & Company
affairs

13.  All excise levies should
be reviewed and
replaced by CENVAT
 0% excise duty on Life-
saving drugs and
equipments, security
items, food items etc
 Uniformity in all State
legislations &
procedures relating to
VAT
 Service Tax should be
levied comprehensively
leaving out only a few
services by including
them in a negative list
 A separate legislation
for levy of Service Tax,
which should
eventually be integrated
with Central Excise Law

14.  The services should
be classified on the
basis of WTO
classification
 CENVAT credit &
Service Tax credit
schemes should be
integrated
 Services should be
classified on the basis
of WTO classification
 Introduce E-tax with
facility of online filing
of returns & payment
of tax

15.  95th Constitutional Amendment, 2003
- inserted Art.268A & Entry 92C to the
Union List
Art.268A – Service Tax levy by the Union
government and collected and
appropriated by the union government
 Integrated CENVAT and Service Tax credit
schemes

16.  Headed by Vijay
Kelkar
Objects
 To rationalise &
simplify the direct tax
laws
 To redesign the
procedure so as to
encourage voluntary
compliance
 Main Focus On “How
to increase incoming
money…???”

17.  Introduce GST by
combining UCE & ST
Laws
 Negative list
introduced in 2012
Budget must be
reviewed
 Make PAN/UID
mandatory
 CBEC should
develop a model for
comprehensive cross
verification of claims
for input tax credit
 Reduce subsidies on
diesel, petrol,
kerosene, LPG & Urea

18.  GST to impmlement from 1st April 2016
onwards
 PAN Card is mandatory for all money
transactions – 2015 Union Budget

19. 