Abolition of Wealth Tax to introduction of Black Cash Act-How private revenue tax has developed in India

Personal income tax

Personal income tax


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Key Highlights

  • The Present Tax Act launched in 1957 was rolled again in 1988, to be included not directly by way of the Revenue-tax Act. 

  • Introduction of the ten digit alphanumeric Everlasting Account Quantity (PAN) benefitted the federal government drastically by guaranteeing monitoring of data and in following the cash path.

  • The final decade witnessed some transformational adjustments within the tax programs that has resulted in bringing in a major change in private taxes.

Taxation has been prevalent in India for the reason that time of Manusmriti and Arthashastra. The British did introduce tax legal guidelines in India as early as 1860. The present Revenue-tax Act was launched in 1961 beneath the aegis of the Direct Tax Administrative Fee.  

Since then, tax legal guidelines have undergone a number of coverage and administrative reforms to make governance for tax authorities and compliance for the taxpayers, simpler. From a private taxation perspective, the coverage reforms included measures akin to discount of tax charges (the utmost marginal tax charge was as excessive as 97% at one time), simplification of tax slabs, introduction of presumptive taxation and widening of the taxation base. The executive tax reforms included digital submitting of tax returns, simplification of tax types, offering transparency in operations and swifter processing of tax refunds. 

Since independence, a number of legal guidelines have been launched and abolished, just like the Wealth Tax Act launched by the federal government in 1957 which was subsequently abolished in 2015 as the price of governance was greater than the income the tax was in a position to generate. Equally, the Present Tax Act launched in 1957 was rolled again in 1988, to be included not directly by way of the Revenue-tax Act. 

On the executive entrance, introduction of the ten digit alphanumeric Everlasting Account Quantity (PAN) and the requirement to cite the identical in all correspondence for the tax division, in addition to linking the identical with all investments, opening of financial institution accounts and many others. benefitted the federal government drastically by guaranteeing monitoring of data and in following the cash path. For taxpayers’ comfort, the launch of the Revenue Tax Division portal (www.incometaxindia.gov.in) in 2002 was step one in offering a digital interface between the Division and taxpayers. This has now been additional upgraded in June 2021. The primary citizen-friendly single-window Aayakar Seva Kendra (ASK) was arrange in 2007, for centralised receipt and registration of specified classes of paperwork, together with revenue tax returns. 

Adjustments within the final decade

The final decade witnessed some transformational adjustments within the tax programs that has resulted in bringing in a major change in private taxes. A few of these are listed under – 

  1. Tax return processing: Centralized Processing Centres have been arrange for bulk processing of tax returns in addition to tax withholding returns of e-filed returns in 2012. This has enabled swifter processing of at the very least simple returns and sooner issuance of refunds. The TRACES (TDS Reconciliation Evaluation and Correction Enabling System) web site was launched to function an built-in one-stop platform for stakeholders to offer info associated to tax withholding, investments and many others. 
  2. Complete Tax returns types: Tax returns have seen a number of adjustments through the years not solely to report revenue earned throughout the yr, but in addition extra info akin to Indian property, overseas property, financial institution accounts, loans and many others. Simplified tax types akin to ‘Sugam’ was launched for presumptive taxation, and simplified tax regime was launched, conserving in thoughts the compliance burden of small taxpayers. 
  3. Aid to Senior Residents – Senior residents (not having any revenue from enterprise/occupation), have been relieved from cost of advance tax, and exempt from submitting tax returns in some circumstances (having solely pension revenue and curiosity revenue)
  4. New up to date web site launched – Within the yr 2021 restructuring of the revenue tax division was accredited by the Cupboard to realize the targets of elevated productiveness and income assortment, improved taxpayer expertise and repair and many others.

Different Particular tax assortment Schemes 

The goal of the tax division has been to extend the income base by bringing in additional people into the tax internet and to plug income leakages. With this goal in thoughts, the federal government had initiated a number of schemes such because the Voluntary Disclosure Scheme in 1951, “Kar Vivad Samadhan Scheme” in 1998, the Revenue Declaration Scheme in 2016 and the Black Cash Act in 2015, the place taxpayers might disclose revenue that had escaped taxation prior to now and search immunity by way of cost of taxes and penalty. 

It’s clear that the revenue tax division is transferring in direction of a digitized 24/7 service to supply to taxpayers. With faceless assessments, the tax division is in search of to handle malpractices of corruption and bureaucratic delays. With the linking of Aadhaar and PAN, the federal government goals to rule out the potential of a single taxpayer with a number of PANs. One can count on that in future, tax returns, at the very least for people, shall be fully pre-filled with all info and processed on an actual time foundation and assessments executed by way of video conferencing. 

Aarti Raote is a visitor contributor. Views expressed are private.

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