Kelkar committee report

4. The exemption granted to railways for transportation of goods and passengers (of
higher class) is valid upto 30.09.2012. This exemption should not be extended
beyond this date.
5. CBEC should put in place a robust information system to increase the deterrence
level and the cost of evasion. Since both Union Excise Duties and Service Tax are
VAT-type, the information system should provide for a mechanism for cross-
verification of all claims for input-tax credit. At present, such a mechanism does
not exist. As a result, the ability of the Excise Department to detect fraudulent
claims is severely undermined. Under the Kerala VAT regime the dealer must
electronically provide invoice-wise details of all sales to, and purchases from,
registered dealers. This enables the Department to cross-verify every claim for
input tax credit and identify mismatches for further investigation. A similar model
for verification of TDS already exists in the Income Tax Department. Therefore,
CBEC should also develop a similar model for comprehensive cross-
verification of claims for input tax credit. This will significantly improve the
economics of non-compliance in favour of the tax administration. Further, this
should be implemented immediately and need to wait till the introduction of the
GST.
6. Effort should be made to expedite the implementation of the Goods and Services
Tax as recommended by the Thirteenth Finance Commission (TFC).This will
enhance output, exports and tax revenues. Even though the roll-out of GST from
1 st April, 2013 does not appear to be feasible, the passage of the pending
Constitutional Amendment relating to introduction of GST in the Winter Session
of the Parliament would send out very strong signal to trade and industry about
Government’s serious intent to move forward on this issue.
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