HISTORY OF INCOME TAX IN INDIA In India ,this tax was introduced for the first time in 1860,by Sir

James Wilson in order to meet the losses sustained by the Government on account of the Military Mutiny of 1857.Thereafter ,several amendments were made in it from time to time. At last.in 1886,a separate Income tax act was passed. This act remained in force up to, with various amendments from time to time. In 1918, a new income tax was passed and again it was replaced by another new act which was passed in 1922.This Act remained in force up to the assessment year 1961-62 with numerous amendments The Income Tax Act of 1922 had become very complicated on account of innumerable amendments. The Government of India therefore referred it to the law commission in1956 with a view to simplify and prevent the evasion of tax.. The law commission submitted its reportin September 1958,but in the meantime the Government of India had appointed the Direct Taxes Administration Enquiry Committee submitted its report in 1956. In consultation with the Ministry of Law finally the Income Tax Act,1961 was passed. The Income Tax Act 1961 has been brought into force with 1 April 1962. It applies to the whole of India and Sikkim(including Jammu and Kashmir).Since 1962 several amendments of far-reaching nature have been made in the Income Tax Act by the Union Budget every year. which also contains Finance Bill. After it is passed passed by both the houses of Parliament and receives the assent of the President of India, it becomes the Finance act. Besides this ,amendments have also been made by various Amendment acts, for instance, Taxation laws Amendment Act, 1984, Direct Taxes Amendment Act,1987, Direct Taxes Law(Amendment)Acts of 1988 and 1989,Direct Tax Law (Second amendment)Act,1992 and1993, are mostly based on the recommendation of Chelliah Commiyye Report. As a matter of fact,the Income Tax Act,1961,which came into force on 1st April, 1962, has been amended and re-amended drastically.It has therefor become very complicated both for the administering authorities and the tax-payers.

What is Tax? Tax is that part of our income which the Government of India takes from us for providing us numerous facilities like, water and drainage system, protection against internal and external enemies, developing infrastructure.

ESSENTIAL CHARACTERISTIC OF TAX It is an enforced contribution. It is generally payable in money. It is proportionate in character. It is levied on persons or property. It is levied by the state which has jurisdiction ove person or property. It is levied by the law-making body of the state.

DIRECT & INDIRECT TAX Direct Tax : A tax that is paid directly by an individual or organization to the imposing entity. A taxpayer pays a direct tax to a government for different purposes, including real property tax, personal property tax, income tax or taxes on assets. Direct taxes are different from indirect taxes, where the tax is levied on one entity, such as a seller, and paid by another, such a sales tax paid by the buyer in a retail setting. A direct tax cannot be shifted to another individual or entity. The individual or organization upon which the tax is levied is responsible for the fulfillment of the tax payment. Indirect taxes, on the other hand, can be shifted from one taxpayer to another. 1) Income Tax : A tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public. Most countries employ a progressive income tax system in which higher income earners pay a higher tax rate compared to their lower earning counterparts. Indirect Tax : Government has to perform many functions in the discharge of its duties like infrastructure development, health, education, defence of the country, removal of poverty, maintenance of law and order, etc. To meet these requirements huge amount of capital is required. The government collects money from public through a wide variety of sources i.e. fees, fines, surcharges and taxes. Indirect Tax is a tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. The Ministry of Finance (Department of Revenue) through the Central Board of Excise and Customs (CBEC), an apex indirect tax authority, implements and administers excise (central excise), customs and service tax laws. Circulars, notifications and clarifications issued by the CBEC supplement these indirect tax laws. 1) Service Tax : 2) Excise : 3) VAT :