Direct Tax Reforms: Identifying the Kelkar Committee

India's economic journey post-liberalisation in 1991 involved significant policy changes aimed at fiscal consolidation and promoting growth. Direct tax reforms were a crucial component of this strategy, focusing on making the tax system more efficient, equitable, and easier to comply with.

Role of Committees in Tax Policy

Various committees have been formed over the years to study and recommend changes in India's economic and financial policies. These expert committees provide valuable insights and suggestions to the government.

Simplification of Direct Taxes: The Kelkar Committee

The question asks specifically about the committee that recommended the simplification of direct taxes in the context of post-liberalisation India. Among the options provided:

• The Tarapore Committee primarily focused on capital account convertibility.
• The Dutt Committee looked into industrial licensing policy.
• The Narasimham Committee made significant recommendations for reforming the banking and financial sectors.
• The Kelkar Committee, particularly the task force headed by Vijay Kelkar, played a pivotal role in suggesting major reforms for the direct tax structure. It emphasized simplifying the tax laws, rationalizing tax rates, and broadening the tax base to enhance compliance and improve the overall fiscal consolidation effectiveness.

Therefore, the committee credited with recommending the simplification of direct taxes in post-liberalisation India is the Kelkar Committee.

Key Contribution: The Kelkar Committee's reports (especially the ones on Fiscal Responsibility and Tax Policy) were influential in shaping subsequent direct tax legislation, aiming for a simpler and more robust tax regime.