Download History of Direct Taxation in India Notes PDF – History of Income Tax in India Study Notes PDF
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History of Income Tax in India
In the year 1860, the tax was first introduced in India by Sir James Wilson with the intention to meet the losses sustained by the government due to the Military Mutiny of 1857. In the year 1918, a new income tax has been passed and again it was substituted by another new act which was passed in 1922. This Act remained in operation up to the assessment year 1961-62 with several amendments.
In discussion with the Ministry of Law finally, the Income Tax Act, of 1961 has been passed. The Income Tax Act 1961 was brought into force on 1st April 1962. It was applicable to the entire India and Sikkim (which also includes Jammu and Kashmir).
From the year 1962 many amendments of far-reaching nature were made in the Income Tax Act by the Union Budget each year.
Important Concepts in Income Tax
Income: Income is money that an individual or business receives in exchange for
providing a good or service or through investing capital under section 2 (24) “income” includes:
- profits and gains;
- the value of any perquisite or profit in lieu of salary taxable under clauses (2)and (3) of section 17
- the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid;
- any sum chargeable to income tax under clauses (ii) and (iii) of section 28 or section 41 or section 59;
- any capital gains chargeable under section 45;
- the profits and gains of any business of insurance carried on by a mutual insurance company or by a cooperative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions contained in the First Schedule.
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