Why was there a need for tax reforms in India?

There was a need for tax reforms in India to ensure international competitiveness and to meet the requirements of the market economy.You can read about the Tax Administration Reform Commission – TARC. Mandate, Report, Recommendations in the given link.

There was a transition to a market based economy from the centrally planned development strategy. In 1991, the then Finance Minister Manmohan Singh had recommended the appointment of the Tax Reforms Commission (TRC). Raja Chelliah was the chairman of the Tax Reforms Commission (TRC). Fiscal crisis is always the immediate reason for reforming the tax system.

Further readings:

1. Tax Policy Council & Tax Policy Research Unit: Notes for UPSC
2. Taxation in India – Direct taxes & Indirect Taxes, Features of Taxation System