Indirect taxes are the most important source of revenue in India according to the document. It discusses the history of tax reforms committees in India from 1953 onwards and their recommendations to rationalize and simplify indirect tax structures. Key suggestions included introducing VAT and service tax, reducing exemptions, and integrating credit schemes. Most recommendations were accepted over time, like implementing service tax in 1994, introducing CENVAT in 2000, and finally Goods and Services Tax (GST) in 2016 to subsume multiple indirect taxes into one.

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. 