New Income Tax Code to be unveiled today
Finance Minister Pranab Da is to unveil the new Income tax Code today.
The First Income tax Act was introduced in India in 1860, mainly to meet the huge expenditure on the 1857 mutiny. The father of Income Tax in India is James Wilson who became India's First Finance Member. The Finance Member James Wilson while introducing the Income-tax Act in 1860 quoted from the authority of Manu for levying income tax in this country. The Act received the assent of the Governor General on 24th July, 1860. It came into effect immediately and was modelled on the English Statute.
There are references both in Manu Smriti and Arthasastra to a variety of tax measures. Manu, the ancient sage and law-giver stated that the king could levy taxes, according to Sastras . The wise sage advised that taxes should be related to the income and expenditure of the subject. He, however, cautioned the king against excessive taxation and stated that both extremes should be avoided namely either complete absence of taxes or exorbitant taxation. According to him, the king should arrange the collection of taxes in such a manner that the subjects did not feel the pinch of paying taxes.
Most of the taxes of Ancient India were highly productive. The admixture of direct taxes with indirect Taxes secured elasticity in the tax system, although more emphasis was laid on direct tax. The tax-structure was a broad based one and covered most people within its fold. The taxes were varied and the large variety of taxes reflected the life of a large and composite population.
Kautilya's Arthasastra was the first authoritative text on public finance, administration and the fiscal laws in this country. His concept of tax revenue and the on-tax revenue was a unique contribution in the field of tax administration. It was he, who gave the tax revenues its due importance in the running of the State and its far-reaching contribution to the prosperity and stability of the Empire.
The Income Tax Act, 1922 gave a shape to the present structure of the Income Tax in India. The 1922 Act was replaced by the present Income Tax Act 1961 which is now nearly fifty years old and is one of the most complicated Acts in the world, which needs to be simplified. Rajiv Gandhi wanted an income tax return that can be prepared and furnished by the ordinary taxpayer without professional assistance. That is still a far cry.
Let us hope the new Income Tax Code is not another attempt to complicate matters further.
"It was only for the good of his subjects that he collected taxes from them, just as the Sun draws moisture from the Earth to give it back a thousand fold" - -- Kalidas in Raghuvansh eulogizing KING DALIP .
"From the treasury, comes the power of the government and the Earth whose ornament is the treasury, is acquired by means of the Treasury and Army". – Kautilya