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History of Direct Taxation

The concept of direct taxation in India dates back to ancient times, with references in the Manusmriti and Arthashastra. Modern direct tax began under British rule when James Wilson introduced the first Income Tax Act in 1860 to meet financial needs after the revolt of 1857. A permanent system was established through the Income Tax Act of 1886, later replaced by the 1922 Act, which centralized tax administration. The current framework is based on the Income-tax Act, 1961, which has since been amended to suit Indiau2019s evolving economic and social needs.

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History of Direct Taxation

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  1. History of Direct Taxation History of Direct Taxation in India in India

  2. Introduction What is Direct Taxation? Direct taxes are taxes levied directly on individuals or organizations, such as income tax, wealth tax, and property tax. Importance: These taxes are crucial for the government's revenue, supporting public services and infrastructure.

  3. TIME ERA Ancient India: British Era: The British introduced structured taxation systems, including land revenue and income tax. Taxation systems existed in ancient times, with references in texts like the Arthashastra.

  4. Post-Independence Developments 1947 Onwards: After independence, India inherited the British tax system and began reforms to suit its needs. Mission The Income Tax Act of 1961 was enacted, consolidating various tax laws into a single framework.

  5. Establishment of the Income Tax Department 1922: The Income Tax Department was established to administer direct taxes. 1924: The Central Board of Revenue Act constituted the Board as a statutory body with functional responsibilities for the administration of the Income-tax Act.

  6. Evolution of the Central Board of Direct Taxes (CBDT) 1963: The Central Board of Revenue Act, 1963, led to the bifurcation of the Central Board of Revenue into two separate boards: the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs. Role of CBDT: CBDT is responsible for framing policies and overseeing the administration of direct taxes in India.

  7. Key Milestones in Direct Taxation 1980s: Introduction of tax reforms to simplify the tax structure. 1991: Economic liberalization led to further tax reforms and modernization. 2000s: Implementation of electronic filing systems and taxpayer services.

  8. Recent Developments Faceless Assessment Digital Initiatives Introduction of faceless assessment to reduce human interface and improve transparency. Launch of e-filing portals and mobile applications for easier tax compliance.

  9. Significance of Direct Taxes Revenue Generation Economic Stability Social Equity Direct taxes are a major source of revenue for the government. They contribute to economic planning and stability. Progressive tax rates ensure equitable distribution of wealth.

  10. Conclusion Revenue Generation The system of direct taxation in India has evolved to meet the changing economic landscape. Future Outlook Ongoing reforms aim to make the tax system more efficient, transparent, and taxpayer-friendly.

  11. Thank You https://incometaxindia.gov.in/Pages/about-us/history-of-direct-taxation.aspx https://incometaxindia.gov.in/Pages/about-us/history-of-direct-taxation.aspx

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