The Tax Administration Reform Commission set up to streamline tax governance, reduce tax disputes and increase coordination between government agencies will release the first report by May-end, according to Parthasarathi Shome, Advisor to the Union Finance Minister.

Shome who heads the Commission said this will be followed up with four quarterly reports based on extensive consultation before it is finalised.

Between 2009 and 2012 there have been retrospective amendments in taxes and indirect taxation systems has a large element of interpretation and exemptions which have all led to huge disputes. The tax administration needs to be simplified but the Government also faces the challenge of ensuring tax compliance.

Addressing a function to mark the release of a book on Service Tax by a Chartered Accountant, P Rajendra Kumar, Shome said a developing economy like India has the job of ensuring adequate tax revenue to meet expenditure from a relatively small tax base.

The tax base is limited to the salaried segment and, in the last couple of decades, the corporate sector.

Large segments such as agriculture are not taxed, exemptions are prevalent and expenditure too cannot be curtailed as subsidy support is also essential to a large segment of the population.

Also, over the years, tax rates have been brought down, he said. The proposed Direct Tax Code and the Goods and Services Tax will emerge as the major vehicles of taxation. DTC will orient tax incentives to investment rather than profits. GST will help avoid the cascading effect of taxes under VAT. The overall approach is to simplify taxation.