Question

Write a short notes on history of taxation in India.

Answer 1

Answer:

Payment of tax is compulsory for each citizen of a country. Indian taxes are of two forms, i.e., direct tax and indirect tax. In India, taxation is rooted in the Manu Smriti and Arthasastra eras. The new Indian tax structure is predicated on this ancient tax system that was focused on maximum social welfare principle.

History of Indian income tax

• In India, such tax was first introduced in 1860 by Sir James Wilson to meet the government’s problems due to the 1857 Military Mutiny.
• A new income tax was introduced in 1918 and it was then replaced by other new Act that was passed in 1922.
• This Act stayed in effect with various changes up to the assessment year 1961-62.
• Finally, the Income Tax Act, 1961 was passed in consultation with the Ministry of Law. With 1 April 1962, the Income Tax Act 1961 was brought into effect. It refers to entire India and to Sikkim which includes Jammu & Kashmir.
• Since 1962 the Union Budget has made several far-reaching changes each year in the Income Tax Act.
• Bifurcated Central Board of Revenue and a separate Direct Tax Board is known as CBDT (Central Board of Direct Taxes) established under the Central Board of Revenue Act, 1963.
• The principal tax enactment in India is the Parliament’s Income Tax Act, approved in 1961, that imposes a tax on people’s income.