Indirect Tax Reforms in the Indian Economy

Abstract

Several expert committees have examined India's indirect tax structure in the past and made valuable recommendations. More recently, the Tax Reform Committee (Chelliah Committee) laid down the agenda for gradual reduction in tariffs and rationalization of customs and excise duty structures. On this basis, significant progress has been made since 1992. Tariffs have been brought down from a peak rate of over 300 to 40 per cent with a view to bring down costs and make the Indian industry more competitive. Excise duty rates have been significantly reduced, procedures simplified, and exemptions pruned. Yet, according to Rustagi⁄ the excise system is far away from modernity. While he agrees that whatever has been done so far is no mean achivement, more needs to be done.