1. Editorial: Restarting the tax durbar

Editorial: Restarting the tax durbar

It has to handle burning cases if it is to be relevant

By: | Updated: December 8, 2014 4:33 PM

Given the success of the tax forum headed by Parthasarathi Shome in creating a platform for open discussion of tax-related problems towards the end of the UPA regime, it is a good thing finance minister Arun Jaitley has decided to formalise the mechanism—while industry can always discuss its problems with tax officials, the tax forum introduces independent experts which helps paper over many problems as well as imparts a degree of impartiality to the process. But the real test of the panel will be whether it succeeds in finding a workable way in dealing with complicated tax issues like retrospective taxation or handling of transfer pricing orders. The Shome tax durbar’s remit, unfortunately, was limited to administrative issues. Though the tax forum did solve 29 direct taxes and 47 indirect taxes issues, this never stopped the taxman from carrying on with its high-pitched assessments—to that extent, this robbed the tax durbar of some of its legitimacy.

This is probably the reason why the Tax Administration Reforms Commission (TARC)—also headed by Shome—in its report, has suggested creation of a permanent body on the lines of the tax forum to deal with the tax disputes. The TARC wants the two tax boards to respond to the suggestions of the panel on administrative as well as policy matters within a fixed time-frame, say three months, and if this is not done, the issue is to be put up before the finance minister. Considering the difficulties in getting the taxman implement the decisions taken by outside experts or forum, it remains to be seen whether an institutionalised mechanism will introduce transparency and will help provide quick remedies. It is clear, though, that if India’s tax system is to be made more friendly, and the taxman is to not waste his time chasing frivolous cases—the taxman loses 88% of the cases in the Supreme Court and 79% in the tribunals—the forum needs to be suitably empowered. Failing which, the forum will become a bit like the Rangachary committee which, after holding discussions with industry, came out with formulations on transfer-pricing that were mostly not accepted by the taxman. The ball is in finance minister Jaitley’s court.

  1. S
    SC
    Dec 5, 2014 at 7:11 pm
    There is only one question on tax durbar or Shome Durbar or any other Durbar. Will this kind of Darbar is of any use to solve any economic problem of this country. India is a strange country where Shomes or economists are silent on a particular problem. For example, any company can issue shares with a premium of Rs. 500 and after 18 months the value may fall to Rs. 70/- while on the other hand another company may allot share of the value of Rs 10 for Rs. 10 to a planted or sister concern or a parent company or subsidiary company while its market value of the share is Rs. 250/- and the planted company may sell the shares after two months for Rs. 240 per share. Is it all fair? Is there any Shome or Lahiri or any supreme court Advocate or AG etc to explain whether it is justified what is happening in the country? A company can do whatever it likes and blame the Income Tax Officer if he tries to set the companies in order bing him a tax terrorist, telling him premium received or not received is not taxable. But free style functioning of any company receiving high premium or receiving nil should not be checked by Income tax Officer who is the only statutory officer to check the misdeeds of a company. In my opinion, these Tax durbars are simply working as lobbyists.
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