How did the 1857 revolt sow the seeds of income tax law in India? All you need to know
New Delhi | Manich Mishra: If you are employed and your income is more than Rs 2.50 lakh, you have to pay income tax to the government. Do you know that income tax is linked to the 1857 revolt against British rule? You will be surprised to learn that the British have started collecting taxes to compensate for the loss caused by the revolt of the Indian sepoys deployed in the British army.
Sir James Wilson introduced the tax in 1860 for this purpose. The new Income Tax Law was passed in 1918. Later, a new Income Tax Law was passed in 1922. This law remained in force until 1961-1962. However, at that time, many changes were made to it.
-Income Tax Act of 1860
The British rulers suffered huge losses due to the sepoy rebellion in 1857. To compensate for this, the British government passed the Income Tax Act in 1860. However, it was abolished after five years in 1865.
Some salient features of the Income Tax Act 1860:
– Income from agriculture was tax exempt
-Life insurance premiums were also tax exempt
-Hindu Undivided Families (HUF) were treated as separate entities in terms of tax
Key features of the Income Tax Act 1918:
In the Income Tax Act 1918, major changes were made to the tax system. For the first time, receipts and deductions were included in the calculation of taxable income.
– Income Tax Act 1922
The Income Tax Act 1922 was considered a milestone in India’s income tax system. This law has become representative of the organized structure of income tax in India. The Income Tax Act 1922 brought the flexibility India needed in the tax system. This law remained in force in the country for the next 40 years. The peculiarity of the Income Tax Act 1922 was that the tax rates were set according to the budgetary needs of the time. In addition, an amendment to the Income Tax Act is no longer required to change the tax rate.
– Post-independence tax system
The Income Tax Act 1922 was the most prominent till 1962 but several amendments were made to it till 1961 when the Government of India passed the Income Tax Act 1961. After its implementation, there was a significant change in the history of income tax. in the countryside.
A revenue audit system has been introduced in the country for tax calculation. The responsibilities of income tax officers were also prescribed under this law. At present, only the Income Tax Act 1961 is in force. A year later, the government introduced income tax rules in 1962. The Central Board of Revenue was divided and the Central Board of Direct Taxes (CBDT) was also created under the Income Tax Act. Central Revenue Council of 1963.
Some peculiarities of the Income Tax Act 1961:
Income tax is levied on income in five ways, including:
– Business or professional income
-Income in the form of capital gains
-Income from home ownership
-Income from other sources
Why does the government collect taxes?
When the government collects taxes from the people, it goes directly to its treasury. The government in power determines the use of taxes and how to organize the budget. The tax system is not optional in India. If you fall under the prescribed tax bracket, you will have to pay tax.
To provide basic facilities to every citizen in the country, the government directly or indirectly collects the amount as tax and uses it for the welfare of the society.
Primarily, the money collected through taxes is used for the construction of hospitals, roads, educational institutions and free houses/electricity/rations for the poor. In addition, taxes are used to generate electricity, water supply, maintain public order (police administration), fire brigade, judiciary, disaster management and other development projects of public welfare.
(Note: The story above was originally written by Manish Mishra, Deputy Editor, Dainik Jagran. It was translated into English by Talibuddin Khan, Sub-Senior Editor, Jagran English.)