History Of Taxation An Indian Perspective (a Critical Analysis Of Changing Tax Structure)

Coverage of this Article

1. Introduction
- There is enough evidence to demonstrate that income taxes were imposed even in prehistoric and ancient cultures.

2. A brief overview of the Income Tax Act, 1961
- The effectiveness of the tax system affects how strong an economy is.

3. Features of Income Tax Act
- Income tax is the sum due when the government levies taxes on the direct income of its citizens under its jurisdiction.

4. Infractions of the Income Tax Act of 1961
- Income tax, goods and services tax, import-export tax, state border tax, and other taxes are all required in India.

5. Keeping money outside of India
- International bank accounts are not under the purview of the Indian income tax office.

6. Conclusion
- Citizens should pay income tax in order to advance their country rather than thinking of it as a burden.

ntroduction

There is enough evidence to demonstrate that income taxes were imposed even in prehistoric and ancient cultures. Contrary to popular opinion, taxes on income and wealth are not a modern invention. These were occasionally collected in a random way and levied either on the sale and purchase of goods or cattle. A decree from Caesar Augustus ordering the taxation of everyone in the world was issued around two thousand years ago. Taxes were imposed in the Greek, German, and Roman Empires as well, sometimes based on revenue and other times on occupations. Tax revenue passed to the monarch for many centuries. Later, poll taxes and indirect taxes called "Ancient Customs," which were levies on wool, leather, and hides, were introduced to complement these. These levies and taxes, which were imposed in a variety of ways and on a range of goods and professions, were put in place to help governments pay for their military and civil expenditures as well as to provide for the basic needs of the populace like road upkeep, justice administration, and other state-related duties.

A brief overview of the Income Tax Act, 1961

The effectiveness of the tax system affects how strong an economy is. A fair tax structure can boost a nation's economy and result in its success. This ultimately leads to happier and more productive citizens. 

Taxes come in two flavours: direct and indirect. Income tax, property tax, and other direct taxes are those that an entity pays to the government directly. Indirect taxes are those that a company pays by way of intermediaries. One example of an indirect tax levied by the Indian government is service tax.

Together with the Ministry of Law, the Law Commission presented its findings in September 1958. Act of 1961, commonly known as the Income Tax Act of 1961, which went into force on April 1, 1962, presently governs this legislation. All of India, including the state of Jammu & Kashmir, must follow it.

Any legislation is insufficient in and of itself until the gaps are filled. India's income tax laws are governed by the Income Tax Act of 1961, along with a number of income tax regulations, notices, circulars, and court rulings, including tribunal decisions.

Since the Income Tax Act's passage in India in 1886, it has undergone numerous amendments and improvements. A new Income Tax Act was enacted in 1918 following the First World War, once more to combat the lingering effects of the economic destruction brought on by the war. Up until 1922, when it was replaced by another Act, this income tax law was in effect. The Income Tax Act was changed once more after 40 years and 15 years after India attained independence from the British. The current Income Tax Act was enacted on April 1, 1962, following its adoption in 1961. It includes Sikkim, Jammu, and Kashmir, as well as all of India. Under the auspices of the Central Board of Revenue Act, 1963, the Central Board of Revenue split into two and established a separate board for direct taxes, known as the Central Board of Direct Taxes.

Features of Income Tax Act

Income tax is the sum due when the government levies taxes on the direct income of its citizens under its jurisdiction. Even if the entire process could seem difficult, the country's citizens may be affected by a successful resolution of the issue. The government uses income tax as a tool to ensure that community initiatives and official jobs are completed correctly and on schedule.

• The following are the act's main characteristics:
• The Finance Act's rate for the current assessing year's income tax is applied to the income from the previous year.
• A person is subject to income tax based on the income from the prior year.
• Based on the taxpayer's residency status in the previous year, the amount of his duty is determined.
• Only when total revenue for the fiscal year surpasses the threshold tax-free amount determined by the Finance Act for that particular year does income tax liability arise.
• Taxes must be withheld at the source and deposited in the government's coffers.

Infractions of the Income Tax Act of 1961

Income tax, goods and services tax, import-export tax, state border tax, and other taxes are all required in India. Some people attempt to avoid paying these taxes despite the laws and norms governing them.

Any behaviour that aims to hide, understate, or fraudulently misrepresent income in order to lower your tax liability is considered tax evasion. For instance, omitting to pay taxes or paying less than what is due is tax fraud. It generally entails criminal activity carried out by an individual or group in an effort to escape their tax obligations. It involves fabricating or hiding revenue and falsely claiming deductions without supporting documentation.

There are several ways for people to avoid paying taxes. Some of the most popular tactics include the following:

Smuggling to avoid paying state import taxes, border taxes, and other fees: Smuggling is a common practise among individuals and businesses to avoid paying federal, state, and local taxes and fines. Smuggling is a criminal violation in India, and tax evasion carries heavier penalties.

Submitting tax returns incorrectly: One popular way to evade paying taxes is to submit false information, such as understating your income, overstating your deductions, or engaging in any other form of fraudulent reporting. However, doing so is forbidden.

Falsely maintaining financial records: Falsely maintaining financial records, such as balance sheets and account books, may provide the appearance of a low annual income. Some businesses also refuse to save sales receipts in order to overstate their income and reduce their annual tax obligation.

Not showing any earnings: Cash transactions are frequently used by persons to mask their source of income. You don't have to pay taxes if you don't have any documented sources of income. Businesses routinely fail to produce sales invoices. In a similar vein, landlords are prohibited from accepting cheques or bank transfers for rent payments.

Keeping money outside of India: International bank accounts are not under the purview of the Indian income tax office. To protect their money, some people could have a bank account abroad.

Conclusion

Citizens should pay income tax in order to advance their country rather than thinking of it as a burden. The general public should make an effort to understand the importance of income taxes and how their money is regarded to contribute to the development of the nation. In order for our country to keep up with other industrialised nations and advance further, every responsible citizen must always pay their income taxes on time. Our country's growth and social disintegration would suffer if people started to see paying income tax as a burden and chose not to. As a result, paying income tax on time is important to avoid this.