TTTTaaaaxxxx AAAAddddmmmmiiiinnnniiiissssttttrrrraaaattttiiiioooonnnn RRRReeeeffffoooorrrrmmmm iiiinnnn IIIInnnnddddiiiiaaaa SSSSppppiiiirrrriiiitttt,,,, PPPPuuuurrrrppppoooosssseeee aaaannnndddd EEEEmmmmppppoooowwwweeeerrrrmmmmeeeennnntttt SSSSeeeeccccoooonnnndddd RRRReeeeppppoooorrrrtttt ooooffff tttthhhheeee TTTTaaaaxxxx AAAAddddmmmmiiiinnnniiiissssttttrrrraaaattttiiiioooonnnn RRRReeeeffffoooorrrrmmmm CCCCoooommmmmmmmiiiissssssssiiiioooonnnn MMMMiiiinnnniiiissssttttrrrryyyy ooooffff FFFFiiiinnnnaaaannnncccceeee,,,, GGGGoooovvvveeeerrrrnnnnmmmmeeeennnntttt ooooffff IIIInnnnddddiiiiaaaa NNNNeeeewwww DDDDeeeellllhhhhiiii SSSSeeeepppptttteeeemmmmbbbbeeeerrrr 2222000011114444 Table of Contents S. No. Subject Page Nos. 1. Preface i - iii 2. Composition of the Tax Administration Reform Commission iv 3. List of Tables v 4. List of Diagrams, Graphs and Boxes vi 5. List of Annexures vii 6. Glossary viii - xiii 7. Chapter VIII – Customs capacity building 551 - 631 VIII.1 Introduction 551 VIII.2 Snap shot of customs in India 551 Emerging trends in the global economy and VIII.3 560 the changing role of customs VIII.4 Way forward 567 VIII.5 Summing up 626 VIII.6 Recommendations 627 8. Chapter IX – Information exchange 632 - 688 IX.1 Need for information exchange 632 IX.2 Current status 633 IX.3 Global best practices 649 IX.4 Gap 661 IX.5 Way forward 665 IX.6 Roadmap 673 IX.7 Summing up 682 IX.8 Recommendations 682 S. No. Subject Page Nos. 9. Appendices Chapter IX 690 - 712 CIB module in the ITD system of the IX.1 690 CBDT IX.2 Information exchange through DTAAs 691 IX.3 Data collection mechanisms of the CBEC 693 IX.4 Mandate of the CEIB 695 IX.5 Updated mandate of the EIC 700 IX.6 Financial Intelligence Unit 702 IX.7 Methods of information exchange 704 Legal arrangements for inter-agency IX.8 708 collaboration 10. Annexure Annexure – I TARC meetings with its stakeholders 714 Annexure – II Composition of Focus groups 715 Annexure – III TARC meetings 716 Annexure – IV Gazette notification constituting TARC 717 Tax Administration Reform Commission Chairman Dr. Parthasarathi Shome Level of Minister of State Members- full time Y. G. Parande Ex-Member, CBEC Sunita Kaila Ex-Member, CBDT Members- part time M.K. Zutshi Ex-Chairman, CBEC S.S.N. Moorthy Ex-Chairman, CBDT S. Mahalingam Ex-Chief Financial Officer and Executive Director, TCS M.R. Diwakar Ex-Vice President, Taxation, Murugappa Group Secretariat Sanjay Kumar Secretary N.K. Jain Director Sukalyan Banerjee Under Secretary Research Consultants Vrinda Jaju Prativa Shaw Administrative Support Tejpal Consultant (Administration) Jagdish Assistant Ankur Verma Steno/Assistant iv Tables Table 8.1 Total tax revenue of the central government and share of customs duties Table 8.2 Revenue foregone Table 8.3 Outright smuggling cases detected by DRI and other customs formations Commercial frauds and duty evasion cases detected by DRI and other Table 8.4 customs formations Table 8.5 Arrests, preventive detentions and prosecutions initiated by DRI Table 8.6 Comparison of Indian customs with global trends Table 8.7 Distribution of top importers on revenue basis Table 9.1: Sharing of data by FIU with the tax agencies Table 9.2: Financial outcomes of STRs Table 9A.1: EDI partners for data or information exchange Table 9A.2: Key outcomes of FINnet Table 9A.3: Inter-agency information sharing in United States Table 9A.4: Inter-agency information sharing in United Kingdom Table 9A.5: Inter-agency information sharing in Australia Table 9A.6: Inter-agency information sharing in Canada Table 9A.7: Key of terms used in the above Tables and their meaning Table 9A.8: Elements of service agreements Table 9A.9: Scope elements service agreements Table 9A.10: Elements for governance framework in service agreements Table 9A.11: Elements for operations in service agreements Table 9A.12: Performance elements in service agreements Table 9A.13: Implementation elements in service agreements v Diagrams Diagram 8.1 Evolution of role of customs Diagram 8.2 Dynamic risk management framework Diagram 8.3 Pre and post-modernisation customs control paradigm Diagram 8.4 Border eco-system Diagram 8.5 Layered approach to coastal security Diagram 9.1 Flow of AIR and CIB information into the ITD system Diagram 9.2: Schematic diagram of Integrated Taxpayer Data Management System Diagram 9.3: Schematic diagram of DW & BI Diagram 9.4: Schematic diagram of EDW of CBEC Diagram 9.5: CEIB data or information exchange network Diagram 9.6: Schematic diagram of Financial Intelligence Network Diagram 9.7: Data lifecycle Diagram 9.8: Infinity loop for data and information Diagram 9.9: Stages for setting up integrated data warehouse Diagram 9A.1: Flow of CIB information through ITD system Diagram 9A.2: Framework for flow of FIU information Graphs and Boxes Graph 8.1 Container port traffic in India Graph 8.2 Evolution of RTAs in the world, 1948-2013 Box 9.1: Collect/create once, use many times Box 9.2: One data, many users vi