0Chapter 1
Evolution of tax in India:
1860 – 1865
1867 by License Tax on professionals
1886 – 1917 Act levied the tax on all resident or non-resi. Exempted insurance premium, HUF as distinct entity introduced
1918 for the first time introduced a specific plan of deduction of business income from Net Income.
Income tax act 1922 laid basis of functioning or ITD and criteria of finance bills, Tax rate were to be determined by finance act itself.
IT act 1960 repealed 40 yrs old act, came into force on 1 April 1962
Tax Structure in India
A265 no tax except with authority of law
A246 – distribution of power to levy tax b/w Center and state govt.
SCHEDULE 7: " Three lists " power distribution between CG and SG
Union List exclusive CG
1. Taxes on Income other than agricultural
2. Custom inc. export duties
3. Excise onTobacco & other goods manufactured in India except for Liquor for Human Consumption, Opium and Narcotics.
4. Interstate Trade of products except for Newspaper
5. Interstate consignment of goods
6. ****matters not included in LIST 2 or 3
State List Exclusive SG
Income tax on AGRICULTURE
1. Excise on ALFHC, Narcotics, Opium
2. Octroi
3. Advertisements other than Newspaper
4. Tax on Goods & Services carried by road or inland waterways
5. Tax on Professionals/ Trade /calling and employment
Concurrent List Both have powers with CG having more powers on conflict.
Administration of Taxes
Central Board of Revenue or Dept of Revenue (apex body to levy taxes)
Is part of Ministry of Finance came into existence by CB of Revenue Act 1923 W.e.f. 1 Jan 1964
CBDT and CBEC came into existence ï? Constitution of both u/s 3 of CBRA 1963
CBDT Responsible direct tax policy and implementation through ITD
Its India’s official FATF
CBDT structure
Chairman (spell secretary to CG) + 6 more (additional Sec. to GOI) all are IRS
Members include
IT, Legislation & Computerisation, Personnel & Vigilance, Investigation, Audit and Judicial.
ITD works U/ Dept Revenue U/ MOF
Responsible for administering Income tax act 1963 & various finance acts
CBEC DoR MoF
The tax shall be:-
Equitable, Progressive, for Public welfare, Social Equality
Tax divided into
1. Direct Tax 2. Indirect Tax
Merits of Direct Tax
Socio Equality, Progressive, Balanced and certainty
Initiate saving, an inflation indicator
Demerits of Direct Tax:
More resources required for COLLECTION of taxes
Can create Non-working nature
Easy tax evasion
Merits of Indirect Tax:
The easy collection, Cannot create non-working nature, Not easy evasion of tax. automatic stabiliser
Demerits of Indirect Tax:
Regressive in nature
Not equally appropriated
Canons Of Tax
Equity: for ax implementation
Economy: shall be lower on Cost of the collection.
Certainty: shall be in prescribed rate
Convenience: As to the time of payment
Objectives of Taxation
Shall be for Revenue generation, Social Welfare, the safety of society from bad customs.
