Why was income tax introduced in India?

It is widely assumed that taxes on income and wealth are of modern origin. However, there is sufficient evidence to suggest that taxes on income were collected in some form or another, even in primitive and ancient cultures. The term “tax” derives from “taxation,” which signifies an estimate. These were charged on the sale and purchase of goods or cattle and were collected haphazardly from time to time. To know more about 194d of income tax act, click here.

Caesar Augustus issued a decree almost 2000 years ago mandating that all globes be taxed. Taxes of a similar kind were imposed in Greece, Germany, and the Roman Empires, sometimes based on turnover and vocations. For many centuries, tax revenue went to the Monarch. Taxes on land and transportable property, such as the Saladin title, were collected in Northern England in 1188.

A Brief back into History

Later, poll taxes and indirect taxes called “Ancient Customs,” which were tariffs on wool, leather, and hides, were introduced to complement these. In various ways and on a variety of commodities and professions, these imposed taxes were assessed to meet the needs of governments to meet their military and civil expenditures and meet the everyday needs of citizens, such as road maintenance, administration of justice, and other State functions.

Asas it is known now, the system of direct taxation has been in India in some form or another since ancient times. A variety of tax measures are mentioned in both Manu Smriti and Arthasastra. According to the Sastras, Manu, the old scholar and law-giver, indicated that the king might charge taxes. The wise sage advised that taxes be levied based on the subject’s income and expenditure. He did, however, warn the king against excessive taxing, stating that both extremes, namely the complete absence of taxes or excessive taxation, should be avoided.

The Income-tax Department’s organizational history began in 1922. For the first time, the Income-tax Act of 1922 assigned distinct nomenclature to separate Income-tax authorities. Thus, the groundwork for a proper administrative structure was laid. The Central Board of Revenue Act of 1924 established the Board as a statutory body with functional responsibility for enforcing the Income-tax Act.

Income-tax Commissioners were appointed independently for each province, and Assistant Commissioners and Income-tax Officers were assigned. The Income-tax Act was amended in 1939, resulting in two critical structural changes: I appellate functions were separated from administrative procedures, creating a new class of officers known as Appellate Assistant Commissioners; and (ii) a central charge was established in Bombay.

Conclusion

The first affiliated office of the Board, called the Directorate of Inspection (Income Tax), was established in 1940 to exercise efficient supervision over the progress and inspection of the work of the Income-tax Department across India. The Appellate Tribunal was established in 1941 due to the separation of executive and judicial authorities. A central charge was also based in Calcutta in the same year.Section 54 of income tax act grants us a detailed view of the structure of the taxation. This was in brief about the history and the reason behind the imposition of Income-tax in India.