"It was only for the good of his subjects that he collected taxes from them, just as the Sun draws moisture from the Earth to give it back a thousand fold" –

--Kalidas in Raghuvansh Eulogizing KING DALIP.

It is a matter of general belief that taxes on income and wealth are of recent origin but there is enough evidence to show that taxes on income in some form or the other were levied even in primitive and ancient communities. The origin of the word "Tax" is from "Taxation" which means an estimate. These were levied either on the sale and purchase of merchandise or livestock and were collected in a haphazard manner from time to time. Nearly 2000 years ago, there went out a decree from Ceaser Augustus that all the world should be taxed. In Greece, Germany and Roman Empires, taxes were also levied sometime on the basis of turnover and sometimes on occupations. For many centuries, revenue from taxes went to the Monarch. In Northern England, taxes were levied on land and on moveable property such as the Saladin title in 1188. Later on, these were supplemented by introduction of poll taxes, and indirect taxes known as "Ancient Customs" which were duties on wool, leather and hides. These levies and taxes in various forms and on various commodities and professions were imposed to meet the needs of the Governments to meet their military and civil expenditure and not only to ensure safety to the subjects but also to meet the common needs of the citizens like maintenance of roads, administration of justice and such other functions of the State.

In India, the system of direct taxation as it is known today, has been in force in one form or another even from ancient times. There are references both in Manu Smriti and Arthasastra to a variety of tax measures. Manu, the ancient sage and law-giver stated that the king could levy taxes, according to Sastras. The wise sage advised that taxes should be related to the income and expenditure of the subject. He, however, cautioned the king against excessive taxation and stated that both extremes should be avoided namely either complete absence of taxes or exorbitant taxation. According to him, the king should arrange the collection of taxes in such a manner that the subjects did not feel the pinch of paying taxes. He laid down that traders and artisans should pay 1/5th of their profits in silver and gold, while the agriculturists were to pay 1/6th, 1/8th and 1/10th of their produce depending upon their circumstances. The detailed analysis given by Manu on the subject clearly shows the existence of a well-planned taxation system, even in ancient times. Not only this, taxes were also levied on various classes of people like actors, dancers, singers and even dancing girls. Taxes were paid in the shape of gold-coins, cattle, grains, raw-materials and also by rendering personal service.

The learned author K.B.Sarkar commends the system of taxation in ancient India in his book "Public Finance in Ancient India", (1978 Edition) as follows:-

"Most of the taxes of Ancient India were highly productive. The admixture of direct taxes with indirect Taxes secured elasticity in the tax system, although more emphasis was laid on direct tax. The tax-structure was a broad based one and covered most people within its fold. The taxes were varied and the large variety of taxes reflected the life of a large and composit population".

However, it is Kautilya's Arthasastra, which deals with the system of taxation in a real elaborate and planned manner. This well known treatise on state crafts written sometime in 300 B.C., when the Mauryan Empire was as its glorious upwards move, is truly amazing, for its deep study of the civilisation of that time and the suggestions given which should guide a king in running the State in a most efficient and fruitful manner. A major portion of Arthasastra is devoted by Kautilya to financial matters including financial administration. According to famous statesman, the Mauryan system, so far as it applied to agriculture, was a sort of state landlordism and the collection of land revenue formed an important source of revenue to the State. The State not only collected a part of the agricultural produce which was normally one sixth but also levied water rates, octroi duties, tolls and customs duties. Taxes were also collected on forest produce as well as from mining of metals etc. Salt tax was an important source of revenue and it was collected at the place of its extraction.

Kautilya described in detail, the trade and commerce carried on with foreign countries and the active interest of the Mauryan Empire to promote such trade. Goods were imported from China, Ceylon and other countries and levy known as a vartanam was collected on all foreign commodities imported in the country. There was another levy called Dvarodaya which was paid by the concerned businessman for the import of foreign goods. In addition, ferry fees of all kinds were levied to augment the tax collection.

Collection of Income-tax was well organised and it constituted a major part of the revenue of the State. A big portion was collected in the form of income-tax from dancers, musicians, actors and dancing girls, etc. This taxation was not progressive but proportional to the fluctuating income. An excess Profits Tax was also collected. General Sales-tax was also levied on sales and the sale and the purchase of buildings was also subject to tax. Even gambling operations were centralised and tax was collected on these operations. A tax called yatravetana was levied on pilgrims. Though revenues were collected from all possible sources, the underlying philosophy was not to exploit or over-tax people but to provide them as well as to the State and the King, immunity from external and internal danger. The revenues collected in this manner were spent on social services such as laying of roads, setting up of educational institutions, setting up of new villages and such other activities beneficial to the community.

The reason why Kautilya gave so much importance to public finance and the taxation system in the Arthasastra is not far to seek. According to him, the power of the government depended upon the strength of its treasury. He states – "From the treasury, comes the power of the government, and the Earth whose ornament is the treasury, is acquired by means of the Treasury and Army". However, he regarded revenue and taxes as the earning of the sovereign for the services which were to be rendered by him to the people and to afford them protection and to maintain law and order. Kautilya emphasised that the King was only a trustee of the land and his duty was to protect it and to make it more and more productive so that land revenue could be collected as a principal source of income for the State. According to him, tax was not a compulsory contribution to be made by the subject to the State but the relationship was based on Dharma and it was the King's sacred duty to protect its citizens in view of the tax collected and if the King failed in his duty, the subject had a right to stop paying taxes, and even to demand refund of the taxes paid.

Kautilya has also described in great detail the system of tax administration in the Mauryan Empire. It is remarkable that the present day tax system is in many ways similar to the system of taxation in vogue about 2300 years ago. According to the Arthasastra, each tax was specific and there was no scope for arbitratiness. Precision determined the schedule of each payment, and its time, manner and quantity being all pre-determined. The land revenue was fixed at 1/6 share of the produce and import and export duties were determined on advalorem basis. The import duties on foreign goods were roughly 20 per cent of their value. Similarly, tolls, road cess, ferry charges and other levies were all fixed. Kautilya's concept of taxation is more or less akin to the modern system of taxation. His over all emphasis was on equity and justice in taxation. The affluent had to pay higher taxes as compared to the not so fortunate. People who were suffering from diseases or were minor and students were exempted from tax or given suitable remissions. The revenue collectors maintained up-to-date records of collection and exemptions. The total revenue of the State was collected from a large number of sources as enumerated above. There were also other sources like profits from Stand land (Sita) religious taxes (Bali) and taxes paid in cash (Kara). Vanikpath was the income from roads and traffic paid as tolls.

He placed land revenues and taxes on commerce under the head of tax revenues. These were fixed taxes and included half yearly taxes like Bhadra, Padika, and Vasantika. Custom duties and duties on sales, taxes on trade and professions and direct taxes comprised the taxes on commerce. The non-tax revenues consisted of produce of sown lands, profits accuring from the manufacture of oil, sugarcane and beverage by the State, and other transactions carried on by the State. Commodities utilised on marriage occasions, the articles needed for sacrificial ceremonies and special kinds of gifts were exempted from taxation. All kinds of liquor were subject to a toll of 5 precent. Tax evaders and other offenders were fined to the tune of 600 panas.

Kautilya also laid down that during war or emergencies like famine or floods, etc. the taxation system should be made more stringent and the king could also raise war loans. The land revenue could be raised from 1/6th to 1/4th during the emergencies. The people engaged in commerce were to pay big donations to war efforts.

Taking an overall view, it can be said without fear of contradiction that Kautilya's Arthasastra was the first authoritative text on public finance, administration and the fiscal laws in this country. His concept of tax revenue and the on-tax revenue was a unique contribution in the field of tax administration. It was he, who gave the tax revenues its due importance in the running of the State and its far-reaching contribution to the prosperity and stability of the Empire. It is truly an unique treatise. It lays down in precise terms the art of state craft including economic and financialadministration.

History of Taxation Post 1922

1. Preliminary :

The rapid changes in administration of direct taxes, during the last decades, reflect the history of socio-economic thinking in India. From 1922 to the present day changes in direct tax laws have been so rapid that except in the bare outlines, the traces of the I.T. Act, 1922 can hardly be seen in the 1961 Act as it stands amended to date. It was but natural, in these circumstances, that the set up of the department should not only expand but undergo structural changes as well.

2. Changes in administrative set up since the inception of the department:

The organisational history of the Income-tax Department starts in the year 1922. The Income-tax Act, 1922, gave, for the first time, a specific nomenclature to various Income-tax authorities. The foundation of a proper system of administration was thus laid. In 1924, Central Board of Revenue Act constituted the Board as a statutory body with functional responsibilities for the administration of the Income-tax Act. Commissioners of Income- tax were appointed separately for each province and Assistant Commissioners and Income-tax Officers were provided under their control. The amendments to the Income tax Act, in 1939, made two vital structural changes: (i) appellate functions were separated from administrative functions; a class of officers, known as Appellate Assistant Commissioners, thus came into existence, and (ii) a central charge was created in Bombay. In 1940, with a view to exercising effective control over the progress and inspection of the work of Income-tax Department throughout India, the very first attached office of the Board, called Directorate of Inspection (Income Tax) - was created. As a result of separation of executive and judicial functions, in 1941, the Appellate Tribunal came into existence. In the same year, a central charge was created in Calcutta also.

2.1

World War II brought unusual profits to businessmen. During 1940 to 1947, Excess Profits Tax and Business Profits Tax were introduced and their administration handed over to the Department (These were later repealed in 1946 and 1949 respectively). In 1951, the 1st Voluntary Disclosure Scheme was brought in. It was during this period, in 1946, that a few Group 'A' officers were directly recruited. Later on in 1953, the Group 'A' Service was formally constituted as the 'Indian Revenue Service'.

2.2

This era was characterised by considerable emphasis on development of investigation techniques. In 1947, Taxation on Income (Investigation) Commission was set up which was declared ultra vires by the Supreme Court in 1956 but the necessity of deep investigation had by then been realised. In 1952, the Directorate of Inspection (Investigation) was set up. It was in this year that a new cadre known as Inspectors of Income Tax was created. The increase in 'large income' cases necessitated checking of the work done by departmental officers. Thus in 1954, the Internal Audit Scheme was introduced in the Income-tax Department.

2.3

As indicated earlier, in 1946, for the first time a few Group A officers were recruited in the department. Training them was important. The new recruits were sent to Bombay and Calcutta where they were trained, though not in an organised manner. In 1957, I.R.S. (Direct Taxes) Staff College started functioning in Nagpur. Today this attached office of the Board functions under a Director-General. It is called the National Academy of Direct Taxes. By 1963, the I.T. department, burdened with the administration of several other Acts like W.T., G.T., E.D., etc., had expanded to such an extent that it was considered necessary to put it under a separate Board. Consequently, the Central Board of Revenue Act, 1963 was passed. The Central Board of Direct Taxes was constituted, under this Act.

2.4

The developing nature of the economy of the country brought with it both steep rates of taxes and black incomes. In 1965, the Voluntary Disclosure Scheme was brought in followed by the 1975 Disclosure Scheme. Finally, the need for a permanent settlement mechanism resulted in the creation of the Settlement Commission.

2.5

A very important administrative change occurred during this period. The recovery of arrears of tax which till 1970 was the function of State authorities was passed on to the departmental officers. A whole new wing of Officers - Tax Recovery Officers was created and a new cadre of post of Tax Recovery Commissioners was introduced w.e.f. 1-1-1972.

2.6

In order to improve the quality of work, in 1977, a new cadre known as IAC (Assessment) and in 1978 another cadre known as CIT (Appeals) were created. The Commissioners' cadre was further reorganised and five posts of Chief Commissioners (Administration) were created in 1981.

2.7

Tax Reforms : Certain important policy and administrative reforms carried out over the past few years are as follows :-

(a). The policy reforms include :-

• • Lowering of rates;

• • Withdrawls/reduction of major incentives;

• • introduction of measures for presumptive taxation;

• • simplification of tax laws, particularly relating to capital gains; and

• • widening the tax base.

(b). The administrative reforms include :--

• • Computerisation involving allotment of a unique identification number to tax payers which is emerging as a unique business identification number; and

• • realignment of the available human resources with the changed business needs of the organisation.

2.8

Computerisation : Computerisation in the Income-tax Department started with the setting up of the Directorate of Income tax (Systems) in 1981. Initially computerisation of processing of challans was taken up. For this 3 computer centres were first set up in 1984-85 in metropolitan cities using SN-73 systems. This was later extended to 33 major cities by 1989. The computerized activities were subsequently extended to allotment of PAN under the old series, allotment of TAN, and pay roll accounting. These computer centres used batch process with dumb terminals for data entry.

In 1993 a Working Group was set up by the Government to recommend computerisation of the department. Based on the report of the Working Group a comprehensive computerisation plan was approved by the Government in October, 1993. In pursuance of this, Regional Computer Centres were set up in Delhi, Mumbai, and Chennai in 1994-95 with RS6000/59H Servers. PCs were first provided to officers in these cities in phases. The Plan involved networking of all users on LAN/WAN. Network with leased data circuits were accordingly set up in Delhi, Mumbai and Chennai in Phase-I during 1995-96. A National Computer Centre was set up at Delhi in 1996-97. Integrated application software were developed and deployed during 1997-99. Thereafter, RS6000 type mid range servers were provided in the other 33 Computer Centres in various major cities in 1996-97. These were connected to the National Computer Centre through leased lines. PCs were provided to officers of different level upto ITOs in stages between 1997 and 1999. In phase II offices in 57 cities were brought on the network and linked to RCCs and NCC.

2.9

Restructuring of the Income-tax department : The restructuring of the Income-tax Department was approved by the Cabinet in its meeting held on 31-8-2000 to achieve the following objectives :-

• • Increase in effectiveness and productivit​y;

• • Increase in revenue collection;

• • Improvement in services to tax payers;

• • Reduction in expenditure by downsizing the workforce;

• • Improved career prospects at all levels;

• • Induction of information technology; and

• • Standardization of work norms

The aforementioned objectives have been sought to be achieved by the department through a multi-pronged strategy of :

• a. redesigning business processes through functionalisation;

• b. increasing the number of officers to rationalise the span of control for better supervision, control and management of workload and to improve tax-payer services and

• c. re-orient, retrain and redeploy the workforce with appropriate incentives in the form of career advancement.

3. Important events affecting the administrative set up in the Income-tax department:

• 1939

  • Appellate functions separated from inspecting functions.

  • A class of officers known as AACs came into existence.

  • Jurisdiction of Commissioners of Income tax extended to certain classes of cases and a central charge was created at Bombay.

• 1940

  • Directorate of Inspection (Income-tax) came into being.

  • Excess Profits Tax introduced w.e.f. 1-9-1939.

• 1941

  • Income-tax Appellate Tribunal came into existence.

  • central charge created at Calcutta.

• 1943

  • Special Investigation Branches set up.

• 1946

  • A few officers of Class-I directly recruited.

  • Demonetisation of high denomination notes made.

  • Excess Profits Tax Act repealed.

• 1947

  • Business Profits Tax enacted (for the period 1-4-1946 to 31-3-1949).

• 1951

  • Report of Income-tax Investigation Commission known as Vardhachari Commission received.

  • Voluntary Disclosure Scheme introduced.

• 1952

  • Directorate of Inspection (Investigation) set up.

  • Inspector of Income-tax declared as an I.T. authority.

• 1953

  • Estate Duty Act, 1953 came into existence w.e.f. 15-10-1953.

  • Act XXV of 1953 gave effect to the recommendations of Commission appointed under Taxation of Income (Investigation Commission) Act, 1947.

• 1954

  • Internal Audit Scheme in the Income-tax Department introduced.

  • Taxation Enquiry Commission known as John Mathai Commission set up.

• 1957

  • The Wealth tax Act, 1957 introduced w.e.f. 1-4-1957.

  • I.R.S.(DT) Staff College started functioning at Nagpur and much later four R.T.Is. stationed at Bombay, Calcutta, Bangalore and Lucknow opened.

• 1958

  • LI>The Gift-tax Act, 1958 introduced w.e.f. 1-4-1958.

  • Report of Law Commission received.

• 1959

  • Direct Taxes Administration Enquiry Committee submitted its report.

• 1960

  • Directorate of Inspection (Research, Statistics & Publications)was set up.

  • Two grades of Inspectors - selection and ordinary grades - merged into one single grade.

• 1961

  • Direct Taxes Advisory Committee set up - Direct Taxes Administrative Enquiry Committee constituted.

  • Income-tax Act, 1961 came into existence w.e.f. 1-4-1962.

  • Revenue Audit introduced for the first time in the Department.

  • New system for evaluation of work done by Income-tax Officers introduced.

• 1963, 1964

  • Central Board of Revenue bifurcated and a separate Board for Direct Taxes known as Central Board of Direct Taxes (CBDT)constituted under the Central Board of Revenue Act, 1963.

  • For the first time an officer from the department became Chairman of the CBDT w.e.f. 1-1-1964.

  • The Companies (Profits) Sur -tax Act, 1964 was introduced.

  • Annuity Deposit Scheme, 1964 introduced.

• 1965

  • Voluntary Disclosure Scheme came into operation.

• 1966

  • Functional Scheme introduced.

  • Special Recovery Unit created.

  • Intelligence Wing created and placed under the charge of Directorate of Inspection (Investigation).

• 1968

  • Valuation Cell came into existence in the Income tax Department.

  • Report of rationalisation and simplification of tax structure (Bhoothalingam Committee) received.

  • Administrative Reforms Commission set up.

• 1969

  • Direct Recruitment to Class II Income-tax Officers made.

  • The post of IAC (Audit) created in the Income-tax Department.

• 1970

  • The posts of Addl. Commissioner of Income-tax created and abolished after one year.

  • Recovery functions which were hitherto performed by Income- tax Officers, given to Tax Recovery Officers. Prior to that State Government officials exercised the functions of a Tax Recovery Officer.

• 1971

  • A new cadre of posts known as Tax Recovery Commissioners introduced w.e.f. 1.1.1972.

  • Report of Direct Taxes Enquiry Committee received.

  • Summary Assessment Scheme introduced w.e.f. 1-4-1971.

• 1972

  • A Special Cell within the Directorate of Inspection (Investigation) created to oversee the cases of big industrial houses.

  • A new cadre of posts known as IAC(Acq.) created and IAC appointed as Competent Authority with the insertion of new Chapter XXA in the Income Tax Act, 1961 on the acquisition of immovable properties in certain cases of transfer to counter evasion of tax.

  • Directorate of Organisation & Management Services (Income- tax) created.

  • The post of I.T.O. (Internal Audit) created.

  • Bradma Scheme in the Income-tax Department introduced.

  • System of Permanent Account Number introduced.

  • Valuation Officers given statutory powers under the Income-tax Act, 1961 and Wealth-tax Act, 1957.

• 1974

  • Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 introduced.

  • Action Plan for the Income-tax Officers introduced for the first time.

  • Concept of M.B.O introduced.

• 1975

  • Voluntary Disclosure Scheme for Income and Wealth implemented.

  • Special Cell for dealing with Smugglers' cases created.

• 1976

  • Settlement Commission created and Taxation Laws (Amendment) Act,1975 inserted a new Chapter XIXA in the Income Tax Act w.e.f.1-4-1976.

  • Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 introduced w.e.f. 25-1-1976.

  • A new scheme for departmentalization of accounts introduced.

  • Chokshi Committee submitted its interim report.

• 1977

  • A new cadre of posts known as IAC (Assessment) created.

• 1978

  • Appellate functions given to a new cadre of Commissioners known as Commissioner (Appeals).

  • Directorate of Inspection (Recovery) set up.

  • A new directorate known as Directorate of Inspection (Vigilance) came into existence by bifurcating the functions of Directorate of Inspection (Investigation).

  • Chokshi Committee submitted its final report.

• 1979

  • A new directorate designated as Directorate of Inspection (Publication & Public Relations) created out of the Directorate of Inspection (RS&P).

• 1980

  • Hotel Receipt Tax Act, 1980 came into force w.e.f. 1.4.1981.

• 1981

  • Economic Administrative Reforms Commission set up.

  • Three new Directorates viz. Directorate of Inspection (Intelligence), Directorate of Inspection (Survey) and Directorate of Inspection (Systems) created.

  • Within the Directorate of Inspection (Income Tax and Audit), a separate Director of Inspection (Audit) appointed.

  • Directorate of Inspection (RS&P) re-organised and Directorate of Inspection (P&PR) re-designated as Directorate of Inspection (Printing & Publications).

  • I.R.S.(DT) Staff College, Nagpur, re-designated as National Academy of Direct Taxes.

  • Special Bearer Bonds (Immunities & Exemptions) Act promulgated.

  • Director General (Special Investigation) and Director General (Investigation) appointed to control the functioning of various Directorates under the control of Central Board of Direct Taxes.

  • Five posts of Chief Commissioner (Administration) created.

  • A few posts of Commissioner of Income-tax were earmarked as Commissioner of Income-tax (Inv.) and Commissioner of Income- tax (Recovery).

• 1982

  • Special Cell within the Directorate of Inspection (Investigation) converted into a separate Directorate and re-designated as Directorate of Inspection (Special Investigation).

  • DIT (Systems) appointed in the Directorate of Income-tax (Organisation and Management Services) to coordinate efforts in introducing electronic data processing in the IT Deptt. A microprocessor based EDP system along with data entry system was installed heralding the era of computerisation.

  • Levy of Hotel Receipts Tax discontinued.

  • Regional Training Institute at Nagpur started functioning under the control of the National Academy of Direct Taxes.

• 1983

  • The vigilance set up reorganised and the strength of Dy. Director (Vigilance) and Asstt. Director(Vigilance) augmented.

  • Computerised systems for processing challans and PAN designed and developed.

• 1984

  • Taxation Laws(Amendment) Act 1984 passed to streamline procedures in the interest of better work management; avoid inconvenience to tax payers; reduce litigation; remove anomalies and rationalise some provisions.

• 1985

  • Post of Director General (Investigation) created for more effective checking of tax evasion.

  • E.D.(Amendment) Act 1985 discontinues levy of estate duty on deaths occurring on or after 16.03.1985.

  • Compulsory Deposit Scheme (Income Tax Payers) Act 1974 discontinued w.e.f. 1.4.1985.

  • Interest Tax Act, 1974 discontinued w.e.f. 31.3.1985

  • A new "Reward Scheme" for motivating officers introduced w.e.f. 1.4.1985.

• 1986

  • The I.T. Act and W.T. Act amended by Taxation Laws (Amendment and Miscellaneous Provisions) Act :-

  • Established Settlement Commission.

  • Introduced Block assets concept for depreciation.

  • Four offices of Appropriate Authority for acquiring property in which unaccounted money is invested set up in metropolitan cities.

• 1987

  • Government's approval obtained to set up three new benches of Settlement Commission.

  • L.K. Jha Committee set up for simplification and rationalisation of tax laws.

  • Office of Directorate General (Tax Exemption) set up at Calcutta.

  • The Direct Tax Law(Amendment) Act 1987 introduced uniform previous year and redesignated the following authorities :-
    

    • Director of Inspection

    • Insp. Asstt. Commissioner of I.Tax

    • Appellate. Asstt. Commissioner

    • Income tax Officer Gr. A

    • Income tax Officer Gr. B

    • Director of Income Tax

    • Dy. Commissioner of Income Tax.

    • -Do- (Appeals)

    • Asstt. Commissioner of I.Tax

    • Income tax Officer

  • Expenditure Tax Act 1987 brought into force.

• 1988

  • Benami Transactions Prohibition Act 1988 introduced.

  • The Government announced a "Time Window Scheme" which allowed tax payers 50% rebate of interest u/s 220(2) if they pay the tax and balance interest. The scheme was in operation between 1.7.88 to 30.9.88.

  • CIT (Central) placed under the control and supervision of Director General (Investigation).

  • Government decided that cadre control for Group 'C' and 'D' posts would be with Chief Commissioner and with CBDT for Group 'A' and 'B'posts.

  • Extension of Direct Tax Law to the State of Sikkim by a notification of the President of India dated 7.11.1988.

• 1989

  • Creation of an attached office of DGIT(Management Systems) to supervise Directorate of I.Tax(Research, Statistics, Publication & Public Relations) and Directorate of I.Tax (Organisation and Management Services) from Sept. 1989.

• 1990

  • Gift tax Bill introduced on 31.5.1990.

  • Creation of 65 posts of Dy. Commissioner of I.Tax by upgradation of equal number of posts of Asstt. Commissioner of I.Tax.

• 1991

  • Interest Tax Act, 1974 revived.

  • Directorate of I.Tax(Systems) started reporting directly to Board.

• 1992

  • Rs. 1400 Presumptive Taxation scheme introduced as a measure to widen tax base.

  • The post of Director General of Income-tax (Management Systems) was abolished.

• 1993

  • 40 additional posts of Commissioner of Income-tax (Appeals) created.

  • Authority for Advance Rulings set up.

  • A comprehensive phased cadre review for Group B, C and D initiated.

• 1994

  • 2068 additional posts in Group B, C and D sanctioned.

  • New PAN introduced.

  • Regional Computer Centres (RCCs) were set up in Chennai, Delhi and Mumbai.

• 1995

  • New procedure for search assessment introduced.

  • 50 years of training commemorated and "Seminar Twenty Five" introduced by National Academy of Direct Taxes.

• 1996

  • 77 posts of Commissioners of Income-tax created.

  • Infrastructure for operational needs strengthened.

  • Study report on 4th cadre review of Group 'A' officers (IRS) of the Department prepared by Directorate of Income Tax (Organisation and Management Services).

• 1997

  • Rates of Income-tax reduced significantly.

  • Legal measures to widen tax base on certain economic indicators introduced in selected cities.

  • Presumptive tax scheme discontinued.

  • Voluntary Disclosure Scheme 1997 introduced.

  • Minimum Alternate Tax introduced.

  • National Computer Centre (NCC) was set up in Delhi.

• 1998

  • Sec. 260A introduced enabling direct appeals to High Court.

  • 1/6 Scheme & penalty for non-filing of return introduced to widen tax base.

  • Gift-tax abolished for gifts made after 1.10.1998.

  • Kar Vivad Samadhan Scheme 1998 introduced.

  • Silver Jubilee of Regional Training Institutes celebrated.

  • Designation of Asstt. Commissioner (Senior Time Scale) changed to Dy. Commissioner and that of Dy. Commissioner (Junior Administrative Grade) to Joint Commissioner.

• 1999

  • Furnishing details of bank account and credit cards in the prescribed form made mandatory for refund purpose.

  • Prima-facie adjustments to return done away with; acknowledgments to serve as intimations.

  • Samman Scheme introduced in 1999 to honour deserving tax payers.

• 2000

  • The process of implementation of restructuring of the Department commenced to increase efficiency and to deal with increased workload.

  • Total sanctioned work force reduced from 61,031 to 58,315.

  • Certain rationalisation measures at structural levels introduced.

  • Interest-tax Act terminated with effect from 1-4-2000.

• 2001

  • The restructuring of the Department resulted in reducing the stagnation at all levels and large number of personnel were promoted in various grades.

  • Jurisdiction pattern was revamped.

  • New posts were created at the level of DGIT/DIT in the areas of Research, International Taxation and Infrastructure.

• 2002

  • Computerised processing of returns all over the country introduced.

  • Kelkar Committee Report, inter alia, recommended :-
    i. Outsourcing of non-core functions of the department ;
    ii. Reduction in exemptions, deductions, reliefs, rebates etc.

  • The National Website of the Income Tax Department (www.incometaxindia.gov.in) was launched to provide a vital interface between the Department and taxpayers.

• 2003

  • The National Website of the Department (www.incometaxindia.gov.in) won the Silver Medal in the category of the 'Government Websites'under the National e-Governance Awards.

• 2004

  • As a measure of widening of tax base, the concept of AIR (Annual Information Return) was introduced.

  • Fringe Benefit Tax (FBT) was introduced as a major step towards widening of tax base and bolstering of the Direct Tax Collection.

  • Securities Transaction Tax (STT) was introduced.

• 2005

  • Tonnage Tax was introduced for the Shipping Companies.

  • Banking Cash Transaction Tax (BCTT) was introduced w.e.f. 01-06-2005.

• 2006

  • A project for enabling electronic filing (e-filing) of Income Tax Returns was launched.

  • Tax Return Preparer Scheme (TRPS) was launched to assist individuals and HUF taxpayers to file their Return of Income.

  • The institution of Income Tax Ombudsman set up in 12 cities throughout the country to look into tax related grievances of the common public.

• 2007

  • The Refund Banker Scheme was launched in Delhi and Patna charges.

  • Sevottam Scheme was launchedto standardize service delivery to the taxpayers.

  • The first citizen-friendly single window Aayakar Seva Kendra (ASK)was setup,for centralized receipt and registration of specified categories of documents, including income tax returns.

  • The Income Tax Department became the biggest revenue mobiliser for the Government in 2007-08, with its share increasing from 34.76%in 1997-98 to 52.75%in 2007-08.

  • All India Tax Network (TAXNET) was setup connecting more than 700 offices in more than 500 cities. Consolidation of 36 (RCC) independent regional databases into a single centralized database (PDC or Primary Data Centre) was carried out.

  • Integrated Taxpayer Data Management System (ITDMS) for drawing of 360° taxpayer profile was launched.

• 2008

  • Cyber Forensic Labs were setup to identify relevant digital data during search and survey operations, recover hidden or password protected or deleted data and store retrieved data in a manner so that it could be used as evidence in judicial proceedings.

  • Electronic filing of Income Tax Returns Project was awarded Silver Award in the category "Outstanding Performance in Citizen Centric Service Delivery" under the National e-Governance Awardsfor the year 2007-08.

• 2009

  • Centralized Processing Centre was setup in Bengaluru for bulk processing of e-filed and paper returns. The Centre operates without any interface with taxpayers in a jurisdiction – free manner.

• 2010

  • Integrated Tax Payer Data Management System (ITDMS) was conferred the Prime Minister's Award for 'Excellence in Governance and Administration'.

  • CPC Bengaluru awarded the Gold Award for 'Excellence in Government Process Re-engineering' under the National e-Governance Awards for the year 2010-2011.

  • To simplify the 50 years old Income-tax Act, 1961,'The Direct Taxes Code Bill, 2010' was introduced in the Parliament.

• 2011

  • Foreign Tax Division of CBDT was strengthened to effectively handle the increase in tax information exchangeand transfer pricing issues.

  • Various IT initiatives were taken for efficient tax administration. These include e-filing and e-payment of taxes, adoption of 'Sevottam' concept by CBEC and CBDT, web based facility for tax payers to track the resolution of refunds and credit for pre-paid taxes and augmentation of processing capacity.

  • A new simplified form 'Sugam' was introduced to reduce the compliance burden of small tax payers falling within presumptive taxation.

• 2012

  • Senior Citizens (not having any income from business/profession), were exempted from payment of advance tax.

  • TRACES (TDS Reconciliation, Accounting and Correction Enabling System) launched to serve an integrated one-stop platform for the stakeholders to facilitate the services related to TDS operations.

• 2013

  • The Government approved the Cadre restructuring of the Department for the creation of 20,751 additional posts and for carrying out various measures to increase the effectiveness of the Department.

  • Briefly, the salient features of the approved restructuring are as under:

    • a. Number of assessment units (AUs) increased by 1080 from 3420 to 4500, for strengthening the tax-administration;

    • b. Each Range to have one more Assessing Officer;

    • c. Increase in the number` of Administrative CsIT deployed on assessment related functions to increase from 228 to 250;

    • d. 114 Special Ranges to be created, with adequate supporting manpower;

    • e. Creation of reserves numbering 620 created in the IRS cadre;

    • f. Bifurcation of the posts of the CITs in the HAG and SAG scales, on functional basis;

    • g. Upgradation of all existing 116 posts of CCsIT in HAG+ and Apex scales along with an increase of their number by 1 post;

    • h. Strengthening of the training set-up with creation of three more RTIs;

    • i. Strengthening the Appellate/Advocacy Structure by increasing the number of CIT Appeals and providing them supporting manpower. Advocacy structure in the ITAT to be strengthened.

• 2014

  • New National Website of the Income Tax Department www.incometaxindia.gov.in launched with enhanced new features and content.

  • SIT to investigate Black Money in Swiss Bank Accounts formed

  • Tax Administrative Reforms Commission (TARC) headed by Dr. Parthasarathi Shome submitted its report of reviewing the applicability of tax policies and tax laws in the context of global best practices and recommending measures for reforms required in tax administration to enhance its effectiveness and efficiency.

6 Benefits of Filing Income Tax Return

Tax is levied on your income once it surpasses a certain level. To pay the taxes, you have to file an Income Tax Return.

ITR is a form wherein you enter details regarding the income you have earned in the past financial year (1^st April-31^st march). Filing an ITR is important and applies to everyone be it a salaried individual, Partnership, or even a HUF.

Filing income tax returns is often seen as a cumbersome process by the majority of the people. That is the reason why many decide to skip filing returns.

As a responsible citizen, you need to make sure that you file your returns every year. This is a moral duty of every working Indian.

Filing ITR can be useful to you as well. Here are the various ways in which filing an Income Tax Return can benefit you.

1. It Acts as a Legal Document

Income Tax Return holds immense legal value. It is recorded with the government. It acts as legal proof in two ways,

a. Identity Proof

The return that you fill can be used as identity proof in various scenarios such as while applying for an AADHAR card, or any other document. The government accepts it as a proof of address as well.

b. Income Proof

As discussed, the ITR form contains a detailed list of all your incomes and expenses. On this basis, the tax you have to file is calculated.

Thus, ITR can also be used as income proof as some transactions such as the purchase of property do require you to show proof of income.

This can come in handy for the ones who are self-employed and don't receive Form 16.

2. Can help you Claim Deductions

To reduce the burden on the taxpayers and to encourage more people to pay their taxes, the government allows certain deductions to you.

a) These deductions and exemptions can be availed in some investments and thus help in reducing the tax you ultimately pay.

b) TDS and rebates can also be claimed back.

But to have access to these tax benefits, you are required to file an income tax return. If you have not filed ITR you cannot claim deductions as well.

3. Important Document While Applying for Loans

When you decide to apply for a loan to purchase something, say a car or a new home for your family or for business, the bank requires you to submit some documents such as

a) Aadhar card

b) PAN card

c) Driver's license

d) Photo ID etc

One important document asked is your income proof. Banks generally asked for ITR for the last three years. This is done to assess your past and current financial situation and whether you will be able to pay the loan or not.

Not only while applying for loans from the bank, but ITR can also be useful to get you a credit card as well. Credit card companies also ask for your past salary and returns before issuing you the card.

4. Helps if Planning to go Abroad

Going abroad involves some procedures to be followed. If you do not file your ITR, then it can deter your plans to go abroad. ITR form is one item in the list of the documents that are required by the countries that you want to visit.

This is because of the following:

a. Having a history of filing income tax returns helps your case and improves your chances of getting visa approval.

b. It gives details about your financial situation to the embassy.

5. Avoid Penalty and Punishment

The taxes that apply to you are governed by the Income Tax Act 1961. Thus, you are required to pay taxes if you fall above the exempt criteria.

So, if you are eligible to pay taxes on your income and yet still fail to file your Income Tax Returns, then you attract charges

The income tax officer can levy a penalty of up to Rs 5000 Rs. Other serious punishments can also occur if you do not file returns.

Thus, you should file ITR to be safe from such penalties and punishments.

6. Losses can be Carried Forward

Section 70 and 71 of The Income-tax Act 1961 contains some provisions for carrying forwarding losses of a particular year to the subsequent year. This means that you can move your loss to the next assessment year.

Here are a few examples:

a. Losses from house property can be carry-forward till the next 8 assessment years and can be set off from income from house property.

b. Loss from business can be carried forward and paid with the future income from the business.

If you do not file an Income tax return, you cannot carry forward or set off your losses.

Filing of the Income-tax return not only helps you but also helps the nation. The tax that you pay is used by the government to build infrastructure and to improve other facilities of the nation such as medical, defence, etc.

The more people file, the more can government spend and provide us with a good country.

Introduction​

The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.

Rates for deduct of tax at source

Taxes shall be deducted at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act. However, in case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements shall also be considered

• TDS Rates

• Withholding Tax Rates

• Tax Rates DTAA v. Income-tax Act

How to pay Tax Deducted/Collected at source?

Tax deducted or collected at source shall be deposited to the credit of the Central Government by following modes:

• 1) Electronic mode: E-Payment is mandatory for

  • a) All corporate assesses; and

  • b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

• 2) Physical Mode: By furnishing the Challan 281 in the authorized bank branch

Note:-

Where tax is deducted/collected by government office, it can remit tax to the Central Government without production of income-tax challan. In such case, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by whatever name called to whom the deductor reports the tax so deducted and who is responsible for crediting such sum to the credit of the Central Government, shall submit a statement in Form No. 24G.to NSDL with prescribed time-limit.

• e-Pay TDS/TCS

• Download Challan

Credit for tax payments

• a. Challan Status

• b. View Your Tax Credit

  • i. Intoduction

  • ii. Online view through E-filing Website

  • iii. Online view through internet banking

  • iv. Online view through TRACES

  • v. Status of e-filing of TDS Statement by your deductor

GST COUNCIL

As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A. The notification for bringing into force Article 279A with effect from 12th September, 2016 was issued on 10th September, 2016.

As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the Centre and the States, shall consist of the following members: -

• Union Finance Minister - Chairperson

• b) The Union Minister of State, in-charge of Revenue of finance - Member

• c) The Minister In-charge of finance or taxation or any other Minister nominated by each State Government - Members

As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, special provisions for certain States, etc.

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi approved setting up of GST Council on 12th September, 2016 and also setting up its Secretariat as per the following details:

• (a) Creation of the GST Council as per Article 279A of the amended Constitution;

• b) Creation of the GST Council Secretariat, with its office at New Delhi;

• (c) Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;

• (d) Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;

• (e) Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India). The Cabinet also decided to provide for adequate funds for meeting the recurring and non-recurring expenses of the GST Council Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat shall be manned by officers taken on deputation from both the Central and State Governments.

GST Council Meetings

GST Council has met fifteen times since its constitution and some important decisions taken in the GST Council meeting are:-

• Rules for conduct of business in GST Council;

• Timetable for implementation of GST;

• The threshold limit for exemption from levy of GST would be Rs. 20 lakhs for the States except for the Special Category States, as enumerated in Article 279A of the Constitution, for which it will be Rs 10 Lakhs);

• The threshold for availing the Composition scheme would be Rs. 50 lakhs. Service providers and some others would be kept out of the Composition Scheme;

• To compensate States for 5 years for loss of revenue due to implementation of GST, the base year for the revenue of the State would be 2015-16 and a fixed growth rate of 14% will be applied to it;

• Approval of the Draft GST Rules on registration, payment, return, refund and invoice, valuation, input tax credit, composition and transitional provisions.

• All entities exempted from payment of indirect tax under any existing tax incentive scheme would pay tax in the GST regime and the decision to continue with any incentive scheme shall be with the concerned State or Central government. In case, the State or Central Government decides to continue with any existing exemption/incentive scheme; it will be administered by way of a reimbursement mechanism.

• Adoption of four slabs tax rate structure of 5%, 12%, 18% and 28%. In addition, there would be a category of exempt goods and further a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the states.

• GST rates on 1211 items were approved at the 14th GST Council meeting held at Srinagar on 18th and 19th of May 2017.

• At the 15th GST Council meeting held at New Delhi on 3rd June 2017, tax rates on the remaining goods were approved.

• 22 states, and 2 Union Territories with Legislatures (Delhi and Puducherry) have already passed their respective State GST Bill in their State Assemblies.

• Issue of cross empowerment and administrative division of taxpayers between the States and Centre has been resolved.

The Central Goods and Services Tax bill, Integrated Goods and Services Tax bill, Union Territories (without legislature) Goods and Services Tax bill and Goods and Services Tax (Compensation to States) bill have been passed by the Lok Sabha on 29.03.2017 and by the Rajya Sabha on 06.04.2017.