INCOME TAX

Income tax is a very important Direct tax. It is a very important and significant
Source of revenue of the government. The government needs money to maintain law
and order in the country , safeguard the security of the country from Foreign Powers
and promote the welfare of the people. All this requires mobilisation of funds from
various sources. These sources may be Direct or Indirect. Income tax being a Direct
Tax, is an important tool to achieve balanced socio-economic growth by providing
concessions and incentives in income tax for various developmental purpose.

• Who is liable to pay Income Tax ?

Every person, whose taxable income for the previous Financial Year exceeds
the minimum taxable limit is liable to pay income tax during the current financial
year at the rates in force during the current financial year.
 TAX AND TAX-SYSTEM

Tax is Compulsory Payment which a government lives on persons for expenditure

incurred for their welfare for which a Tax payer is not granted any direct benefits,
facilities or goods. It is a personal duty of a person to pay taxes . The tax is levied on
persons, goods, incomes or property but taxpayment is to be made persons only in
return of which he is not granted only benefit.

• Seligman has defined :

As the money collected by the government from its People as compulsory
payment payment known as tax to meet to meet expenditure for the general benefit of
the public without deriving any special benefit for itself.
• Professor Tussig :
Defines tax as the Compulsory Contribution by the People to the state.

• Symon James:
Defines that tax is a Compulsory levy is return if which no Direct benefit is
received . The development of the nations depends on the payment of tax by its
citizens.
 Income Tax
In India Income tax was first imposed in 1860 ,to compensate the loss incurred
during first war of independence in1857 and was introduced by sir james Wilson .
Income tax act 1860 was based on the British income tax act . It was again passed in
1886 in which the income was divided under four heads .
1) Wage and pension
2) Profits of companies
3) Interest on shares
4) Income from other sources

The income tax act 1886 was in effect for 32 years. A new income tax act was
passed in 1918 to cope the needs introduced by the first world war.
In 1919 the government of India act was promulgated under which income tax
become
 a subject of the central government.
In 1921 a committee was constituted to obtain suggestions on income tax, subject
to the recommendations of this committee, Income tax act 1922 was passed with a
more scientific and economic base. In accordance with this act central board of
revenue was established in 1924.
After independence in 1950, the Indian constitution come into existence, to
eradicate the discrepancies and complexes of income tax act 1922 and to make it
more accessible and practical, The government handed over the act to the law
commission . The commission submitted its report in 1958 but in the mean while ‘
Direct tax administration enquiry committee ‘ was established under the
chairmanship of Dr Mahabir Tyagi . This committee submitted its report in 1959.
Suggestions were also forwarded by an invited British Economist Prof- Kalder .
As per constitution schedule VII List 1 , a bill was introduced in the parliament .The
said bill became “ INCOME TAX ACT of 1961” after being passed by the
parliament.
 Present Income Tax Act 1961, was enacted through out India ( including Jammu
& Kashmir ) on 1st April , 1962 , there are 298 section and 12 contents exist in the
Income Tax Act of 1961.