BROAD MECHANISM OF INCOME TAX IN INDIA
The First War of Independence in 1857 “as a major financial burden to the English
Government which brought it into great financial difficulties. Thus compelled by
financial necessities the British Government enacted the Income Tax Act,
1886. The financial crunch resulting from the First World War brought to focus the inadequacies of the said Act. After extensive investigation, the Act of
1922’was enacted and was effective for about four decades.
These intervening years saw India gain independence and the new Indian
Government felt that the Incom? Tax Act needed a,thorough overhaul. The Law
Commission submitted a draft bill in 1958. A committee appointed under the
Chairmanship of Mahabir Tagi in 1958′, also known as the Direct Taxes
Administration Committee, to look into the direct tax structure submitted a
draft, Finally, the old Indian Income Tax Act, 1922 was completely recast in 1961
india new Income Tax Act came into force with effect from 1.4.1962.
The administration’of the Income Tax Act, 1962 is done by the Central Board of
Direct Taxes (CBDT), which works under the supervision of the Ministry of Finance.
The CBDT is charged with the duty of framing rules for the administration of the
Income Tax,Act. These rules, known as the Income Fax Rules, 1962, contain various
forms and miscellaneous details. The process of framing rules is a very elaborate one,
it involves notifying the rule first for public deliberation, and then for adoption
The CBDT also issues from time to time, various circulars for the direction of the
officials of the Income Tax Department and for Information of tax payers. It is,
therefore, necessary for a student of income tax to keep himself up-to date with the
latest provision. The best way to do this is to regularly read various the journals and
other tax publications.
Financial Liberty 