Public Resource Mobilisation

UNIT 10 TAX ADMINISTRATION IN (Taxation, Public Debt and

INDIA: TYPES OF TAXES IN Borrowings, Deficit
Financing, Goods and
INDIA, METHODS OF TAXATION Services Tax)

(ROLE OF CENTRAL BOARD OF

DIRECT TAXES AND CENTRAL
BOARD OF INDIRECT TAXES
AND CUSTOMS)*
Structure

10.0 Objectives

10.1 Introduction

10.2 Tax Administration in India

10.3 Types of taxes in India

10.4 Goods and Services Tax Council

10.5 Goods and Services Tax: Advantages

10.6 Role of Central Board of Direct Taxes and Central Board of Indirect Taxes
and Customs

10.7 Conclusion

10.8 Glossary

10.9 References

10.10 Answers to Check Your Progress Exercises

10.0 OBJECTIVES
After reading this unit, you should be able to:

 Bring out the importance of tax administration;

 Discuss the various types of taxes levied in India;

 Explain the role and advantages of Goods and Services Tax Council;

 Examine the role of the Central Board of Direct taxes; and

 Analyse the role of Central Board of Indirect taxes and Customs.

10.1 INTRODUCTION
Taxation is a vibrant social and economic tool. A robust and sustainable tax system
requires good tax administration. The basic purpose of taxation is to improve revenue
collection to finance government expenditure to facilitate the delivery of public goods

*
Contributed by Dr. Anupama Puri Mahajan, Former Post-Doctoral Research Fellow (Public
Administration), Himachal Pradesh University, Shimla.
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Resource Mobilisation and services to people. A strong and good tax administration is required to establish
a ‘robust and sustainable’ tax collection system. The history of tax collection dates
to ancient times in Egypt, China, and Mesopotamia. There is evidence in the form of
a cuneiform (system of writing used in ancient Middle East) tablets stating that “one
must fear the tax collector”. It was generally found that a group of powerful men
belonging to a religious or the royal class collected taxes. The most detailed work
with respect to taxation is Kautilya’s Arthashastra and later from the Jatakas in the
post-Mauryan period. Kautilya’s work on financial matters can be considered as the
guiding text on financial administration. Later in India over the time, several changes
were brought in the accounting system.

This Unit orients the learners with important aspects of tax administration, the various
types of taxes, role of Goods and Services Tax Council, and the role of Central
Board of Direct Taxes and Central Board of Indirect Taxes and Customs.

10.2 TAX ADMINISTRATION IN INDIA

Tax administration is a very important activity that facilitates the government in
proper tax collection. Tax administration has the following functions:

 Taxpayer service: The tax administration must provide quality taxpayer service
as enforcement strategy.

 Taxpayer identification and registration: Issuance of Permanent Account

Number (PAN) to the taxpayers.

 Collection of information: There are three categories to identify taxpayers’

information: i) Taxpayer’s declaration; ii) Information returns submitted by
taxpayers iii) Assessment, searches and seizures and survey operations by the
Income tax department help in collection of information.

 Search and seizure: This is to ascertain facts, collect evidence of concealed

income and to see that tax evasion does not go undetected.

 Survey operations: The income tax authority has the power to check and inspect
the books of accounts, stocks, or other documents by going to the concerned
venue of the business enterprise.

 Verification of tax returns: Intimation of tax/refund on income is to be routinely

generated and sent to the taxpayer.

 Computerisation of tax administration: Electronic filing, electronic data

interchange, and computerised taxpayer assistance can be done to give maximum
benefits to taxpayers.

 Collection of taxes and accounting

 Refund (Vijay Kelkar Committee,2002)

The Income Tax Department (ITD) was established in India as per the Income Tax
Act, 1922. It expanded its organisational structure by establishing the Central Board
of Revenue Act to fulfil the functional responsibilities for the administration of the
IT Act. Gradually, the ITD kept on expanding its organisation in tune with
specialisation of diversified functions of appeal and the inspection of the Department.

130
Tax reforms were introduced from time to time to reach to its present level. Some Tax Administration in India:
major policy, administrative and technological reforms that have been carried over Types of Taxes in India,
Methods of Taxation (Role of
the past few years are: Central Board of Direct Taxes
and Central Board of Indirect
(a) Policy reforms
Taxes and Customs)
 Withdrawals/reduction of major incentives.
 Introduction of measures for presumptive taxation.
 Simplification of tax laws, particularly relating to capital gains; and
 widening the tax base.

(b) Administrative reforms

 Computerisation involving allotment of a unique identification number to

taxpayers which is emerging as a unique business identification number.
 Creation of Tax Information Network (TIN) by National Securities Depository
Limited (NSDL) to modernise the income tax department through information
technology for collection, processing, monitoring, and accounting of direct taxes.
 Facility of e-TDS (Tax Deducted at Source) and e-TCS (Tax Collected at Source).
 Realignment of the available human resources with the changed business needs
of the organisation.

(c) Technological reforms

Computerisation: The computerisation in the Income-tax Department was

initiated in 1981, with the setting up of the Directorate of Income tax (Systems).
Initially computerisation of processing of challans was taken up. For these three
computer centres were first set up in 1984-85 in metropolitan cities. This was
later extended to 33 major cities by 1989. The computerised activities were
subsequently extended to allotment of Permanent Account Number (PAN) under
the old series, allotment of Tax Deduction Account Number (TAN), and pay roll
accounting.

(d) Restructuring of the ITD: In 2000, the ITD was restructured to –

 Enhance effectiveness and productivity.

 Increase revenue collection.
 Improvement in services to taxpayers.
 Reduction in expenditure by downsizing the workforce.
 Introduction of information technology; and
 Standardisation of work norms

The Government of India in September 2021 has launched a new e-filing web portal
for taxpayers.

10.3 TYPES OF TAXES IN INDIA

Taxes are important sources of revenue for the government. It is the means of raising
revenue to finance government spending on goods and services. There are two types
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Resource Mobilisation of taxes in India, direct and indirect taxes. The centre imposes the direct taxes, and
the states levy the indirect taxes. The types of taxes are given below:

1. Direct Taxes: The Government of India imposes four types of taxes. They are:

i. Corporation Tax: It is levied on the domestic and foreign organisations

that operate in India.

ii. Personal Income Tax: This is one of the most popular direct taxes in India
which is based on the personal income of an individual. The slabs of the tax
are determined according to their age, income, or any physical disability.
These slabs can be changed from time to time according to which individuals
must pay their taxes (popularly known as filing income tax returns) annually.

iii. Capital Gains Tax: It is imposed on the sale of assets or investments, for
example, houses, bonds, shares, etc. The tax is calculated according to the
holding period from the date they were sold and are categorised as short-
term and long-term.

iv. Estate Tax: It is also called, ‘inheritance tax’ in common language. It is

paid on the value of estate/money that a person has left after his/her death.

Indirect Taxes: Since 2017, there is only one indirect tax, Goods and Services Tax,
which has subsumed all other indirect taxes that had existed before the passing of
the 101st Constitutional Amendment Act, 2016, GST. This is the major significant
tax reform in India. The Goods and Service Tax took effect on 1 July 2017, after
nearly a ten-year period of debates and discussions. It has been known to follow the
policy of ‘one nation, one tax, one market’. The GST has subsumed almost all indirect
taxes at both the Union level and the States. In India, GST is a multi-stage, destination-
based tax that is imposed on every value addition. India has joined the GST cluster
of 140 countries around the world. It is based on cooperative federalism and economic
integration with an aim to reduce corruption and improve transparency. It is levied
on domestic consumption and India has become a unified market after the introduction
of GST, which is beneficial for the industry, government and as well as the consumer.
It is a technology-based tax which eliminates human interface to the maximum limit
to reduce corruption. GST is a dual model because India is a federal country and is
applicable in all states and the Union.

10.4 GOODS AND SERVICES TAX COUNCIL

The Goods and Services Tax (GST) is the indirect tax imposed on the supply of
goods and services. As we have discussed in detail in unit 8 of this course, it is a
multi-stage, destination -oriented tax imposed and has replaced multiple indirect
taxes at central, state, union territories including VAT, excise duty, service tax, luxury
tax etc.

The four types of GST are: a) State GST (SGST) b) Central GST (CGST) c) Integrated
GST(IGST) d) Union Territory GST (UGST). The Goods and Services Tax Council
(GST Council) is a constitutional body for making recommendations to the union
and state governments on issues related to Goods and Service Tax. It was created to
modify, regulate, and reconcile the goods and services tax in India. It is entrusted
with the responsibilities of making recommendations on:

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 Inclusion of taxes, cesses, and surcharges in GST; Tax Administration in India:
Types of Taxes in India,
 Exemption of certain goods and services; Methods of Taxation (Role of
Central Board of Direct Taxes
 Rates of GST; and Central Board of Indirect
Taxes and Customs)
 GST laws, principles of levy, apportionment of GST;

 Other matters pertaining to implementation and regulation of GST.

The GST Council is chaired by the Union Finance Minister and the other members
are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance
or Taxation of all the States. As per Article 279A (1) of the amended Constitution,
the GST Council has to be constituted by the President within 60 days of the
commencement of Article 279A. As per Article 279A of the amended Constitution,
the GST Council which will be a joint forum of the Centre and the States shall
consist of the following members:

a. Union Finance Minister (Chairperson).

b. Union Minister of State in charge of Revenue or Finance.

c. Minister in charge of Finance or Taxation or any other.

Minister nominated by each State Government.

The Cabinet inter alia took decisions for the inclusion of the following:

d. Secretary (Revenue) as the Ex-Officio Secretary to the GST Council.

e. Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee

(non-voting) to all proceedings of the GST Council.

The Cabinet also decided to provide for adequate funds for meeting the recurring
and non-recurring expenses of the GST Council Secretariat, the entire cost of which
shall be borne by the central government. The GST Council Secretariat shall be
handled by officers taken on deputation from both the Central and State Governments.

10.5 GOODS AND SERVICES TAX :

ADVANTAGES
The indirect tax in India, GST, has many advantages for different sectors, given
below:

1. Advantages for the government:

i. Unified Market and Cascading Effect: This shall help to create a unified
common national market for India, giving a boost to foreign investment and
“Make in India” campaign; also mitigates cascading effect of taxes, as Input
Tax Credit shall be available across goods and services at every stage of supply.

ii. Harmonisation and Compliance: Harmonisation of laws, procedures, and

rates of tax between centre and states and across states; and improved
environment for compliance as all returns are to be filed online, input credits
to be verified online, encouraging monitoring of transactions at each level of
supply chain.

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Resource Mobilisation iii. Uniformity and Common Procedures: The uniform SGST and IGST rates
are said to reduce the tax evasion by eliminating rate arbitrage( It is the
process of simultaneous buying and selling of an asset from different
platforms, exchanges or locations and a profit thus can be made by the
investor) between neighbouring states and that between intra and inter-state
sales; common procedures for registration of taxpayers, refund of taxes,
uniform formats of tax return, common tax base, common system of
classification of goods and services that shall lend greater certainty to taxation
system.

iv. Human Interface: Increased use of IT reduces human interface between the
taxpayer and the tax administration, which shall go a long way in reducing
corruption.

v. Economic Growth and Poverty Reduction: It is envisaged to boost exports

and manufacturing activities, generate more employment, and thus increase
GDP with gainful employment leading to substantive economic growth.
Ultimately it helps in poverty eradication by generating more employment
and more financial resources.

2. Advantages to Trade and Industry: GST is helpful to the trade and industry in
various ways as given below:

i. Simplicity and ease: Simpler tax regime with fewer exemptions; and
increased ease of doing business; Reduction in multiplicity of taxes that are
at present governing our indirect tax system leading to simplification and
uniformity.

ii. Double taxation and cascading effect: Elimination of double taxation on

certain sectors like works contract, software, hospitality sector; mitigates
cascading effects of taxes as Input Tax Credit will be available across goods
and services at every stage of supply.

iii. Reduction in compliance costs: No multiple record keeping for a variety of

taxes - so lesser investment of resources and manpower in maintaining records.

iv. Efficiency in exports: More efficient neutralisation of taxes especially for

exports thereby making our products more competitive in the international
market and give boost to Indian exports.

v. Simple Procedures: Simplified and automated procedures for various

processes such as registration, returns, refunds, tax payments, etc.

vi. Reduction in tax burden: Average tax burden on supply of goods or services
is expected to come down which would lead to more consumption, which in
turn gives impetus to more production thereby helping in the growth of the
manufacturing industries in India.

3. Advantages to Consumers: The consumers also have many benefits with the
implementation of the GST, given below -

i. Transparency: The final price of goods is expected to be transparent due to

seamless flow of input tax credit between the manufacturer, retailer, and
service supplier.
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 ii. Price Reduction: Reduction in prices of commodities and goods in long run Tax Administration in India:
due to reduction in cascading impact of taxation. Types of Taxes in India,
Methods of Taxation (Role of
iii. Exemptions: Relatively large segment of small retailers shall be either Central Board of Direct Taxes
and Central Board of Indirect
exempted from tax or have very low tax rates under a compounding scheme
Taxes and Customs)
- purchases from such entities will cost less for the consumers.

iv. Reduction in Poverty: Poverty eradication by generating more employment

and more financial resources.

4. Advantages to States: The states have gained by the GST implementation in

the following ways:

i. Tax Base and the Power to Tax: Expansion of the tax base as the states
shall be able to tax the entire supply chain from manufacturing to retail;
Power to tax services, which was hitherto with the central government only,
which shall boost revenue and give states access to the fastest growing sector
of the economy.

ii. Favour the States: GST being destination-based consumption tax shall favour
the consuming states.

iii. Development of the State: Improves the overall investment climate in the
country which shall benefit the development in the states.

iv. Better Compliance: Uniformity in SGST and IGST rates reduce the
incentives for evasion by eliminating rate arbitrage between neighbouring
states and between intra and inter-state sales; Improved compliance levels
of the taxpayers shall contribute greatly in improving the revenue collection
of the states.

Check Your Progress Exercise 1

Note: i) Use the space given below for your answers.

ii) Check your answers with those given at the end of the unit.

1) Discuss the policy, administrative and technological reforms introduced in Income

Tax Department.

..............................................................................................................................
..............................................................................................................................
..............................................................................................................................

2) What are the different types of taxes in India?

..............................................................................................................................
..............................................................................................................................
..............................................................................................................................

3) List the advantages of GST in India.

..............................................................................................................................
..............................................................................................................................
..............................................................................................................................

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Resource Mobilisation
10.6 ROLE OF CENTRAL BOARD OF DIRECT
TAXES AND CENTRAL BOARD OF INDI-
RECT TAXES AND CUSTOMS
In India, the Ministry of Finance is responsible for the levy and collection of direct
and indirect taxes with the help of the Central Board of Direct taxes and the Central
Board of Indirect taxes and Customs. They are explained below:

The Central Board of Direct Taxes

The Central Board of Direct Taxes (CBDT) is a statutory authority functioning under
the Central Board of Revenue Act, 1963. The officials of the Board in their ex-
officio capacity also function as a Division of the Ministry dealing with matters
relating to levy and collection of direct taxes. The CBDT provides inputs for policy,
planning and administration of direct taxes through the income tax department.

The Central Board of Revenue as the apex body of the Department, charged with the
administration of taxes, came into existence because of the Central Board of Revenue
Act, 1924. Initially the Board was in charge of both direct and indirect taxes. However,
when the administration of taxes became too unwieldy for one Board to handle, the
Board was split up into two, namely the Central Board of Direct Taxes and Central
Board of Excise and Customs with effect from 1.1.1964. This bifurcation was brought
about by constitution of two Boards under section 3 of the Central Board of Revenue
Act, 1963.

Composition and Functions of CBDT

The Central Board of Direct Taxes consists of a Chairman and following six Members:

1. Chairman

2. Member (Income-tax)

3. Member (Legislation & Computerisation)

4. Member (Personnel & Vigilance)

5. Member (Investigation)

6. Member (Revenue)

7. Member (Audit & Judicial)

The Chairman and members are selected from the Indian Revenue Service (IRS).

Role and Functions of CBDT

The CBDT has the responsibility to make policies regarding discharge of statutory
functions of the Board and of the Union Govt. under the various laws relating to
direct taxes.

The functions and role of CBDT are given below:

1. It makes general policy relating to:

(a) Organisation of the set-up and structure of Income-tax Department.

(b) Methods and procedures of the work of the Board.
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 (c) Measures for disposal of assessments, collection of taxes, prevention and Tax Administration in India:
detection of tax evasion and tax avoidance. Types of Taxes in India,
Methods of Taxation (Role of
(d) Recruitment, training, and all other matters relating to service conditions Central Board of Direct Taxes
and career prospects of the personnel of the Income-tax Department. and Central Board of Indirect
Taxes and Customs)
2. Laying down of targets and fixing of priorities for disposal of assessments and
collection of taxes and other related matters.
3. Policy regarding grant of rewards and appreciation certificates.
4. Any other matter which the Chairman or any Member of the Board, with the
approval of the Chairman, may refer for joint consideration of the Board.
Central Board of Indirect Taxes and Customs
Central Board of Indirect Taxes and Customs-CBITC (erstwhile Central Board of
Excise and Customs-CBEC) is a part of the Department of Revenue under the Ministry
of Finance, Government of India. The CBEC was renamed as CBIC in 2018 after
the roll out of Goods and Services Tax. It deals with the tasks of formulation of
policy concerning levy and collection of Customs, Central Excise duties, Central
Goods & Services Tax and IGST, prevention of smuggling and administration of
matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST
and Narcotics. The Board is the administrative authority for its subordinate
organisations, including Custom Houses, Central Excise and Central GST
Commissionerates and the Central Revenues Control Laboratory.
It is headed by:
1. Chairperson
2. Member (Customs)
3. Member (Legal, CX and ST)
4. Member (GST and Tax Policy)
5. Member (Administration and Vigilance)
6. Member (Investigation)
7. Member (IT and Taxpayer Services)
Its vision comprises promoting India’s socio-economic growth by formulating and
implementing progressive indirect tax policies adopting stakeholder-centric approach
and safeguarding the frontiers. Its mission is to make efforts to establish to have a
robust indirect tax and border control administration to deliver services in a simple;
predictable; fair and just; transparent; technology-driven manner. This will encourage
voluntary compliance; protect honest taxpayers’ rights; facilitate trade with risk-
based enforcement and enable legitimate movement of people, goods, and services.
Role and Functions of Central Board of Indirect Taxes and Customs (CBIT&C)
The CBIT&C is entrusted with the following functions and role:
1. Collection of GST; Customs Duty from international airports, Seaports, Inland
Container Depots, Special Economic Zones (SEZs), Container Freight Stations.
2. Prevention of smuggling on international airports and sea and through land
customs station and border check points.
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Resource Mobilisation 3. Communication: The CBIT&C has the responsibility of acknowledging all
written or electronic communication like declarations, intimations, applications
and returns. It also conveys messages regarding its decisions on various matters
mentioned above.

4. Refunds: It disposes refund claims of customs duty and GST.

5. Drawbacks: Drawbacks in duty is sanctioned in cases of claims or the fixation

of brand rate of duty.

6. Cargo: In case of cargo release time, the CBIT&C fixes the release time for
cargo in case of exports for sea cargo; air cargo; inland container depot and land
customs stations. In case of imports, it decides the release time for all the above-
mentioned mediums of transport.

7. GST: It facilitates GST registration; amendments in it if eligible; or its

cancellation.

8. Audit: It informs in advance in case it undertakes an audit whether it is a GST

audit or customs audit. It also intimates the results of the audit after it has been
completed.

Some other key functions and responsibilities of the Board are release of seized
documents and things if they are no more required by the Department, completion of
the examination and clearance of export consignments at its premises and permission
for self-sealing for export consignment. It issues orders for appeals; and finalises
provisional assessment. The Board has specified timelines for key services given
above.

Check Your Progress Exercise 2

Note: i) Use the space below for your answers.

ii) Check your answers with those given at the end of the unit.

1) Discuss the role and functions of the Central Board of Direct Taxes.
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................

2) Explain the functions of the Central Board of Indirect Taxes and Customs.
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................

10.7 CONCLUSION
A good tax administration system is extremely important to steer the economy in the
direction of economic growth and development. It must follow the principles of
effective taxation such as the right percentage of tax to be imposed, as a percentage
of the Gross Domestic Product, so that tax evasion and avoidance can be reduced.
The taxation policy must be simple and transparent to build confidence among the
taxpayers except in the case of promoting or discouraging some practices like the
sale of alcohol or cigarettes. The authorities must implement progressive taxes so
that the payers are enabled to compete globally while also ensuring efficiency in tax-
138
collection so that it has resources to provide infrastructure to people. In addition, Tax Administration in India:
the governments must, in this regard, provide motivation and inducements to Types of Taxes in India,
Methods of Taxation (Role of
businesses and people to invest in cleaner technologies across a broad range of Central Board of Direct Taxes
industries. Tax reductions can be given to such taxpayers who invest in such spheres and Central Board of Indirect
that would make green tax tolerable. There are initiatives being taken by governments Taxes and Customs)
globally with respect to creation of a low-carbon economy. The Association of
Chartered Certified Accountants (ACCA) considers that taxation is a vibrant economic
and social mechanism and should certainly modify in character as national economies
and business spheres grow.

10.8 GLOSSARY
Central Goods and Services Tax: It replaces existing taxes like service tax, excise
tax.
e-TCS: It is the automated collection of tax at source by the seller from the buyer of
goods (specified u/s 206 C of Income-Tax Act of 1961).
e-TDS: It is automated collection of tax from the very source of income. A person
(deductor) who is liable to make payment of specified nature to any person (deductee)
shall deduct tax at source and remit the same into the account of central government.
Integrated Goods and Services Tax: It is a tax levied on all inter-state supplies of
goods and services.
Input Tax Credit: This is the amount reduced at the time of paying tax on output.
The tax paid on inputs already is taken into account and balance amount is paid.
National Securities Depository Limited (NSDL): It is a privately held and
professionally managed company that is authorised by the Government of India to
hold multiple forms of securities like stocks, bonds etc., as electronic copies.
Permanent Account Number (PAN): It is a ten-character alphanumeric number
issued in the form of a laminated card by the Income tax department to any person
who applies for it.
Presumptive Taxation: This is for businesses covered under Section44 AD of Income
tax Act. Any business which has a turnover of less than Rs. 2 Crores can opt to be
taxed presumptively. It is opted by eligible persons.
State Goods and Services Tax: It replaces the existing taxes like sales tax, luxury
tax etc. It is levied by state government.
Tax Deduction Account Number (TAN): It is a ten-digit alphanumeric number
issued by the Income tax department. It is to be obtained by all persons responsible
for deducting tax at source (TDS) or who are required to collect tax at source.
Tax Information Network (TIN): This is an initiative by Income tax department
for the modernisation of the current system for collection, processing, monitoring
and accounting of direct taxes using information technology.

10.9 REFERENCES
Araki, S. & Claus, I. (2014). A Comparative analysis of tax administration in Asia
and the Pacific. Retrieved from https://www.adb.org/sites/default/files/publication/
41792/tax-administration-asia-pacific.pdf
139
Resource Mobilisation Association for Charterd Certified Accountants. (2009). Tax Principles: From Adam
Smith to Barack Obama, a Policy Paper. Retrieved from https://www.
internationaltaxreview.com/pdfs/itr-week/From-Adam-Smith-to-Barack-Obama.pdf

Bastable, C.F. (1892). Public Finance. London: Macmillan & Co.

Central Board of Direct Taxes & Customs. Retrieved from http://cbic.gov.in/htdocs-

cbec/whoweare/ctzen-chtre-new

Department of Revenue. Retrieved from https://dor.gov.in/

Goods and Services Tax Council. Retrieved from http://www.gstcouncil.gov.in/about-

us

Income Tax Department, Central Board of Direct Taxes. Retrieved from https://
www.incometaxindia.gov.in/pages/about-us/central-board-of-direct-taxation.aspx

Lindell, G. (2000). Future Directions in Australian Constitutional Law. The Federation

Press.

Mahajan, S. & Mahajan, A.P. (2014). Financial Administration in India. New Delhi,
India: PHI India Learning Pvt. Limited.

Ministry of Finance. Retrieved from https://www.finmin.nic.in/about-ministry

Puri, A. (2019). Public Administration for Civil Services. New Delhi, India: Pearson
India Education Services Pvt. Limited.

Ministry of Finance,(2002),Report of the Task Force on Direct Taxes (Vijay Kelkar)

10.10 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check your Progress 1

1) Your answer should include the following points:

The major policy, administrative and technological reforms in the Income Tax
Department include:

Policy Reforms:

 Withdrawals/ reduction of major incentives;

 Introduction of presumptive taxation measures;

 Simplification of tax laws, particularly relating to capital gains; and

 Widening the tax base.

Administrative Reforms

 Computerisation involving allotment of unique identification number to

taxpayers;

 Creation of Tax Information Network (TIN) by National Securities Depository

to facilitate tax collection, processing, monitoring and accounting;

 Facility of e-TDS;

140
Technological Reforms Tax Administration in India:
Types of Taxes in India,
 Setting up of Directorate of Income Tax (Systems); Methods of Taxation (Role of
Central Board of Direct Taxes
 Creation of three computer centres ; and and Central Board of Indirect
Taxes and Customs)
 Allotment of PAN, TAN, Pay roll systems.
 Launching of new portal for e-filing of income tax returns from September 2021.

2) Your answer should include the following points:

 Direct Taxes - Corporation Tax; Personal Income Tax; Capital Gains Tax and
Estate Tax
 Indirect Tax – Goods and Services Tax

3) Your answer should include the following points:

Advantages of the GST to the

Government

 Unified marketing and Cascading Effects

 Harmonisation and Compliance
 Uniformity and Common Procedures
 Human Interface
 Economic Growth and Poverty Reduction

Trade and Industry

 Simplicity and Ease

 Double Taxation and Cascading Effects
 Reduction in Compliance Costs
 Efficiency in Exports
 Simple Procedures
 Reduction in Tax Burden

Consumers

 Transparency

 Price Reductions

 Exemptions

 Reduction in Poverty

States

 Tax base and the power to tax

 Advantageous to states

 Development of states

 Better Compliance
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Resource Mobilisation Check Your Progress Exercise 2

1) Your answer should include the following points:

Functions of CBDT

 General policy making regarding the organisation and procedures of work of

Income tax department

 Laying down of targets and fixing of priorities for disposal of tax assessments

 Policy regarding grant of rewards and appreciation certificates; and

 Any other matter which the Chairman or any Member of the Board, with the
approval of the Chairman, may refer for joint consideration of the Board.

3) Your answer should include the following points:

Functions of Central Board of Indirect Taxes and Customs

 Communication;

 Refunds

 Drawbacks in Customs duties

 Cargo

 GST; and

 Audit

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