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Service tax was introduced in India on the recommendation of :
1. Kelkar Committee
2. Raja J. Chelliah Committee
3. Balwant Mehta Committee
4. Yashwant Sinha Committee
5. None of the above/More than one of the above

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Correct Answer - Option 2 : Raja J. Chelliah Committee

The correct answer is Raja J. Chelliah Committee.

  • Raja J. Chelliah Committee:
    • The Government appointed a Tax Reforms Committee under Prof Raja Chelliah to lay out the agenda for reforming India’s tax system.
    • This TRC came up with three reports in 1991, 1992 and 1993 with several measures, which can be summarized in these points:
      • Reforming the personal taxation system by reducing the marginal tax rates.
      • Reduction in the corporate tax rates.
      • Reducing the cost of imported inputs by lowering the customs duties.
      • Reduction in the number of Customs tariff rates and its rationalization.
      • Simplifying the excise duties and their integration with a Value-Added Tax (VAT) system.
      • Bringing the services sector into the tax net within a VAT system.
      • Broadening of the tax base.
      • Building tax information and computerization.
      • Improving the quality of tax administration.

  • Kelkar Committee:
    • The Vijay Kelkar committee had put out a balanced report in 2015 on overhauling the PPP ecosystem, including governance reform, institutional redesign, and capacity-building. 
    • Ramping up private investments in infrastructure will need action on two fronts:
      • Refreshing institutions and policies for channelling financing.
      • Providing a stable, durable, and empowering ecosystem for private players to partner with government entities.
  • Yashwant Sinha Committee:
    • The report states that there is a need for the government to push important tax reforms through the direct taxes code (DTC) Bill, in line with the recommendations of the parliamentary standing committee on finance.
    • It should streamline tax bands, make tax authorities more accountable, and ensure more focus on people in the higher income bracket.
    • The committee stressed that the government also needs to evolve a national consensus on important policy reforms, such as DTC, goods and services tax (GST) and the Pension Bill.
    • The committee has brought ground-level experience to bear on the recommendations.
    • Government should raise the exemption limit to ₹ 5 lakh.
  • Balwant Mehta Committee:
    • Balwant Rai Mehta Committee was appointed by the Government of India (GoI) in the year 1957 to examine the working of the CDP and NES and to suggest measures for their better performance.
    • The report by this committee was submitted in November 1957.
    • The committee recommended the establishment of the scheme for democratic decentralisation which came to be known as the PANCHAYATI RAJ scheme.
    • All planning and developmental activities should be entrusted to these bodies.
    • The Panchayat Samiti should be the executive body while the Zilla Parishad should be the advisory, coordinating and supervisory body.
    • The District Collector should be the Chairman of the Zilla Parishad.
    • There should be a genuine transfer of power and responsibility to these democratic bodies.

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