History of Direct Taxation
History of Taxation Pre – 1922
"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 Raghuvanshi 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 Artha sastra to a variety of tax measures.
Manu, the ancient sage and lawgiver 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, but 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 composite
population".
However, it is Kautilya's Artha sastra, 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
civilization 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 Artha sastra 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 Vartan 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 organized, 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 centralized 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). Vanik path 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.
2.1World 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'.
2.2This 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.
2.3As 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.
2.4The 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.
2.5A 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.
2.6In 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.
2.7Tax 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.
2.8Computerisation : 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.
2.9Restructuring 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 productivity;
• 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
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.
2015
Abolition of levy of wealth tax under Wealth-tax Act, 1957.
The concept of Place of Effective Management (POEM) was
introduced.
2016
Introduction of Equalisation levy.
Furnishing of Country-by-Country Report introduced to
implement Base Erosion and Profit Shifting ('BEPS') measures.
Presumptive taxation scheme for professionals introduced.
Pradhan Mantri Garib Kalyan Yojana (PMGKY) was launched for
for declaring unaccounted income.
2017
Introduction of levy of fees on taxpayers who filed
income-tax returns after the expiry of the original due date.
Tax rate for the lowest slab of Rs. 2,50,000 to Rs. 5,00,000
was reduced from 10% to 5%.
Shifting of base year from 1981 to 2001 for computation of
Capital Gains.
2018
Reintroduction of the standard deduction from salary person.
New deduction under section 80TTB was introduced for senior
citizens earning bank interest.
Withdrawal of exemption available on capital gains arising
from listed equity shares.
Launch of 'E-Proceeding' to conduct assessment proceedings
electronically.
2019
Introduction of Alternate Tax Regime for domestic companies.
To move towards less cash economy, Section 194N was
introduced for deduction of tax at source (TDS) on withdrawal of cash exceeding
the prescribed limit.
PAN and Aadhaar can be used interchangeably.
Introduction of Document Identification Number (DIN) to
bring transparency in the functioning of the department.
Introduction of e-Assessment Scheme, 2019
2020
Introduction of Faceless Assessment Scheme 2020 &
Faceless Appeal Scheme 2020.
Concessional Tax Rates were introduced for Individuals.
Dividend Distribution Tax (DDT) was abolished.
“Vivad se Vishwas scheme” was introduced to reduce
litigations and generate government revenues.
2021
Launch of New e-filing Portal.
Introduction of JSON utility for filing of Income-tax
returns.
The exemption provided to senior citizens from the filing of
Income-tax returns in certain situations.
New scheme launched for reassessment and search assessments.
Introduction of faceless proceedings before the ITAT.
Constitution of the Board for Advance Ruling.
Discontinuance of Settlement Commission.
2022
Introduction of Taxation of Virtual Digital Assets.
Introduction of tax relief for COVID 19-related
compensation.
Introduction of ‘Updated Return’ which can be filed even if
the due date for filing of belated/revised return has expired.
