Finance Ministry sets unfeasible revenue targets: TARC report

NEW DELHI: The Tax Administration Reform Commission ( TARC) submitted its fourth and final report to the government on Friday, pointing out a tendency to fix unrealistic revenue targets by the finance ministry.

The commission set up by the previous UPA government and headed by Parthasarathi Shome gave recommendations on revenue forecasting, predictive analysis and research for tax governance.

“It was generally felt during the TARC’s interaction with the CBDT and CBEC that revenue targets are being unrealistically fixed by the ministry of finance,” the report said.

The mandate of the commission was to review tax laws and policies in the context of global best practices and recommend appropriate reforms measures.

“When revenue targets are not met, expenditure programmes can get undermined, which leaves the government with two options — either to contain fiscal expenditures or to allow the budget deficit to expand by the amount of revenue shortfall,” the TARC has said calling for need for better revenue forecasting.

This situation has played out in recent years wherein revenue has fallen short of estimates, forcing sharp spending cuts towards the end of the year. The commission has laid out the framework for Tax Policy and Legislation in the Central Board of Direct Taxes and Tax Research Unit in the Central Board of Excise and Customs can follow in forecasting.