History of Direct Taxation

History of Taxation Pre – 1922

"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.
It is a matter of general belief that taxes on income and wealth are of recent origin but there is
enough evidence to show that taxes on income in some form or the other were levied even in
primitive and ancient communities. The origin of the word "Tax" is from "Taxation" which means
an estimate. These were levied either on the sale and purchase of merchandise or livestock and
were collected in a haphazard manner from time to time. Nearly 2000 years ago, there went out
a decree from Ceaser Augustus that all the world should be taxed. In Greece, Germany and
Roman Empires, taxes were also levied sometime on the basis of turnover and sometimes on
occupations. For many centuries, revenue from taxes went to the Monarch. In Northern England,
taxes were levied on land and on moveable property such as the Saladin title in 1188. Later on,
these were supplemented by introduction of poll taxes, and indirect taxes known as "Ancient
Customs" which were duties on wool, leather and hides. These levies and taxes in various forms
and on various commodities and professions were imposed to meet the needs of the
Governments to meet their military and civil expenditure and not only to ensure safety to the
subjects but also to meet the common needs of the citizens like maintenance of roads,
administration of justice and such other functions of the State.

In India, the system of direct taxation as it is known today, has been in force in one form or
another even from ancient times. 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. He laid down that traders and
artisans should pay 1/5th of their profits in silver and gold, while the agriculturists were to pay
1/6th, 1/8th and 1/10th of their produce depending upon their circumstances. The detailed
analysis given by Manu on the subject clearly shows the existence of a well-planned taxation
system, even in ancient times. Not only this, taxes were also levied on various classes of people
like actors, dancers, singers and even dancing girls. Taxes were paid in the shape of gold-coins,
cattle, grains, raw-materials and also by rendering personal service.

The learned author K.B.Sarkar commends the system of taxation in ancient India in his book
"Public Finance in Ancient India", (1978 Edition) as follows:-
"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 composit population".

However, it is Kautilya's Arthasastra, which deals with the system of taxation in a real elaborate
and planned manner. This well known treatise on state crafts written sometime in 300 B.C., when
the Mauryan Empire was as its glorious upwards move, is truly amazing, for its deep study of the
civilisation of that time and the suggestions given which should guide a king in running the State
in a most efficient and fruitful manner. A major portion of Arthasastra is devoted by Kautilya to
financial matters including financial administration. According to famous statesman, the Mauryan
system, so far as it applied to agriculture, was a sort of state landlordism and the collection of
land revenue formed an important source of revenue to the State. The State not only collected a
part of the agricultural produce which was normally one sixth but also levied water rates, octroi
duties, tolls and customs duties. Taxes were also collected on forest produce as well as from
mining of metals etc. Salt tax was an important source of revenue and it was collected at the
place of its extraction.

Kautilya described in detail, the trade and commerce carried on with foreign countries and the
active interest of the Mauryan Empire to promote such trade. Goods were imported from China,
Ceylon and other countries and levy known as a vartanam was collected on all foreign
commodities imported in the country. There was another levy called Dvarodaya which was paid
by the concerned businessman for the import of foreign goods. In addition, ferry fees of all kinds
were levied to augment the tax collection.

Collection of Income-tax was well organised and it constituted a major part of the revenue of the
State. A big portion was collected in the form of income-tax from dancers, musicians, actors and
dancing girls, etc. This taxation was not progressive but proportional to the fluctuating income.
An excess Profits Tax was also collected. General Sales-tax was also levied on sales and the
sale and the purchase of buildings was also subject to tax. Even gambling operations were
centralised and tax was collected on these operations. A tax called yatravetana was levied on
pilgrims. Though revenues were collected from all possible sources, the underlying philosophy
was not to exploit or over-tax people but to provide them as well as to the State and the King,
immunity from external and internal danger. The revenues collected in this manner were spent
on social services such as laying of roads, setting up of educational institutions, setting up of new
villages and such other activities beneficial to the community.

The reason why Kautilya gave so much importance to public finance and the taxation system in
the Arthasastra is not far to seek. According to him, the power of the government depended upon
the strength of its treasury. He states – "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".
However, he regarded revenue and taxes as the earning of the sovereign for the services which
were to be rendered by him to the people and to afford them protection and to maintain law and
order. Kautilya emphasised that the King was only a trustee of the land and his duty was to
protect it and to make it more and more productive so that land revenue could be collected as a
principal source of income for the State. According to him, tax was not a compulsory contribution
to be made by the subject to the State but the relationship was based on Dharma and it was the
King's sacred duty to protect its citizens in view of the tax collected and if the King failed in his
duty, the subject had a right to stop paying taxes, and even to demand refund of the taxes paid.

Kautilya has also described in great detail the system of tax administration in the Mauryan
Empire. It is remarkable that the present day tax system is in many ways similar to the system of
taxation in vogue about 2300 years ago. According to the Arthasastra, each tax was specific and
there was no scope for arbitratiness. Precision determined the schedule of each payment, and its
time, manner and quantity being all pre-determined. The land revenue was fixed at 1/6 share of
the produce and import and export duties were determined on advalorem basis. The import
duties on foreign goods were roughly 20 per cent of their value. Similarly, tolls, road cess, ferry
charges and other levies were all fixed. Kautilya's concept of taxation is more or less akin to the
modern system of taxation. His over all emphasis was on equity and justice in taxation. The
affluent had to pay higher taxes as compared to the not so fortunate. People who were suffering
from diseases or were minor and students were exempted from tax or given suitable remissions.
The revenue collectors maintained up-to-date records of collection and exemptions. The total
revenue of the State was collected from a large number of sources as enumerated above. There
were also other sources like profits from Stand land (Sita) religious taxes (Bali) and taxes paid in
cash (Kara). Vanikpath was the income from roads and traffic paid as tolls.

He placed land revenues and taxes on commerce under the head of tax revenues. These were
fixed taxes and included half yearly taxes like Bhadra, Padika, and Vasantika. Custom duties and
duties on sales, taxes on trade and professions and direct taxes comprised the taxes on
commerce. The non-tax revenues consisted of produce of sown lands, profits accuring from the
manufacture of oil, sugarcane and beverage by the State, and other transactions carried on by
the State. Commodities utilised on marriage occasions, the articles needed for sacrificial
ceremonies and special kinds of gifts were exempted from taxation. All kinds of liquor were
subject to a toll of 5 precent. Tax evaders and other offenders were fined to the tune of 600
panas.

Kautilya also laid down that during war or emergencies like famine or floods, etc. the taxation
system should be made more stringent and the king could also raise war loans. The land
revenue could be raised from 1/6th to 1/4th during the emergencies. The people engaged in
commerce were to pay big donations to war efforts.

Taking an overall view, it can be said without fear of contradiction that 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. It is truly an
unique treatise. It lays down in precise terms the art of state craft including economic and
financialadministration.

History of Taxation Post 1922

1. Preliminary :
The rapid changes in administration of direct taxes, during the last decades, reflect the history of
socio-economic thinking in India. From 1922 to the present day changes in direct tax laws have
been so rapid that except in the bare outlines, the traces of the I.T. Act, 1922 can hardly be seen
in the 1961 Act as it stands amended to date. It was but natural, in these circumstances, that the
set up of the department should not only expand but undergo structural changes as well.

2. Changes in administrative set up since the inception of the department:

The organisational history of the Income-tax Department starts in the year 1922. The Income-tax
Act, 1922, gave, for the first time, a specific nomenclature to various Income-tax authorities. The
foundation of a proper system of administration was thus laid. In 1924, Central Board of Revenue
Act constituted the Board as a statutory body with functional responsibilities for the administration
of the Income-tax Act. Commissioners of Income- tax were appointed separately for each
province and Assistant Commissioners and Income-tax Officers were provided under their
control. The amendments to the Income tax Act, in 1939, made two vital structural changes: (i)
appellate functions were separated from administrative functions; a class of officers, known as
Appellate Assistant Commissioners, thus came into existence, and (ii) a central charge was
created in Bombay. In 1940, with a view to exercising effective control over the progress and
inspection of the work of Income-tax Department throughout India, the very first attached office of
the Board, called Directorate of Inspection (Income Tax) - was created. As a result of separation
of executive and judicial functions, in 1941, the Appellate Tribunal came into existence. In the
same year, a central charge was created in Calcutta also.

2.1World War II brought unusual profits to businessmen. During 1940 to 1947, Excess
Profits Tax and Business Profits Tax were introduced and their administration handed over
to the Department (These were later repealed in 1946 and 1949 respectively). In 1951, the
1st Voluntary Disclosure Scheme was brought in. It was during this period, in 1946, that a
few Group 'A' officers were directly recruited. Later on in 1953, the Group 'A' Service was
formally constituted as the 'Indian Revenue Service'.
2.2This era was characterised by considerable emphasis on development of investigation
techniques. In 1947, Taxation on Income (Investigation) Commission was set up which was
declared ultra vires by the Supreme Court in 1956 but the necessity of deep investigation
had by then been realised. In 1952, the Directorate of Inspection (Investigation) was set up.
It was in this year that a new cadre known as Inspectors of Income Tax was created. The
increase in 'large income' cases necessitated checking of the work done by departmental
officers. Thus in 1954, the Internal Audit Scheme was introduced in the Income-tax
Department.
2.3As indicated earlier, in 1946, for the first time a few Group A officers were recruited in the
department. Training them was important. The new recruits were sent to Bombay and
Calcutta where they were trained, though not in an organised manner. In 1957, I.R.S.
(Direct Taxes) Staff College started functioning in Nagpur. Today this attached office of the
Board functions under a Director-General. It is called the National Academy of Direct Taxes.
By 1963, the I.T. department, burdened with the administration of several other Acts like
W.T., G.T., E.D., etc., had expanded to such an extent that it was considered necessary to
put it under a separate Board. Consequently, the Central Board of Revenue Act, 1963 was
passed. The Central Board of Direct Taxes was constituted, under this Act.
2.4The developing nature of the economy of the country brought with it both steep rates of
taxes and black incomes. In 1965, the Voluntary Disclosure Scheme was brought in
followed by the 1975 Disclosure Scheme. Finally, the need for a permanent settlement
mechanism resulted in the creation of the Settlement Commission.
2.5A very important administrative change occurred during this period. The recovery of
arrears of tax which till 1970 was the function of State authorities was passed on to the
departmental officers. A whole new wing of Officers - Tax Recovery Officers was created
and a new cadre of post of Tax Recovery Commissioners was introduced w.e.f. 1-1-1972.
2.6In order to improve the quality of work, in 1977, a new cadre known as IAC (Assessment)
and in 1978 another cadre known as CIT (Appeals) were created. The Commissioners'
cadre was further reorganised and five posts of Chief Commissioners (Administration) were
created in 1981.
2.7Tax Reforms : Certain important policy and administrative reforms carried out over the
past few years are as follows :-
(a). The policy reforms include :-

 • Lowering of rates;

 • Withdrawls/reduction of major incentives;

 • introduction of measures for presumptive taxation;

 • simplification of tax laws, particularly relating to capital gains; and

 • widening the tax base.

(b). The administrative reforms include :--

 • Computerisation involving allotment of a unique identification number to tax payers

which is emerging as a unique business identification number; and

 • realignment of the available human resources with the changed business needs of
the organisation.

2.8Computerisation : Computerisation in the Income-tax Department started with the setting

up of the Directorate of Income tax (Systems) in 1981. Initially computerisation of
processing of challans was taken up. For this 3 computer centres were first set up in 1984-
85 in metropolitan cities using SN-73 systems. This was later extended to 33 major cities by
1989. The computerized activities were subsequently extended to allotment of PAN under
the old series, allotment of TAN, and pay roll accounting. These computer centres used
batch process with dumb terminals for data entry.
In 1993 a Working Group was set up by the Government to recommend computerisation of
the department. Based on the report of the Working Group a comprehensive
computerisation plan was approved by the Government in October, 1993. In pursuance of
this, Regional Computer Centres were set up in Delhi, Mumbai, and Chennai in 1994-95
with RS6000/59H Servers. PCs were first provided to officers in these cities in phases. The
Plan involved networking of all users on LAN/WAN. Network with leased data circuits were
accordingly set up in Delhi, Mumbai and Chennai in Phase-I during 1995-96. A National
Computer Centre was set up at Delhi in 1996-97. Integrated application software were
developed and deployed during 1997-99. Thereafter, RS6000 type mid range servers were
provided in the other 33 Computer Centres in various major cities in 1996-97. These were
connected to the National Computer Centre through leased lines. PCs were provided to
officers of different level upto ITOs in stages between 1997 and 1999. In phase II offices in
57 cities were brought on the network and linked to RCCs and NCC.
2.9Restructuring of the Income-tax department : The restructuring of the Income-tax
Department was approved by the Cabinet in its meeting held on 31-8-2000 to achieve the
following objectives :-

 • Increase in effectiveness and productivity;

 • Increase in revenue collection;

 • Improvement in services to tax payers;

 • Reduction in expenditure by downsizing the workforce;

 • Improved career prospects at all levels;

 • Induction of information technology; and

 • Standardization of work norms

The aforementioned objectives have been sought to be achieved by the department

through a multi-pronged strategy of :

 a. redesigning business processes through functionalisation;

  b. increasing the number of officers to rationalise the span of control for better
supervision, control and management of workload and to improve tax-payer services
and

 c. re-orient, retrain and redeploy the workforce with appropriate incentives in the form
of career advancement.
3. Important events affecting the administrative set up in the Income-tax department:

 1939

 Appellate functions separated from inspecting functions.

 A class of officers known as AACs came into existence.
 Jurisdiction of Commissioners of Income tax extended to certain classes
of cases and a central charge was created at Bombay.
 1940

 Directorate of Inspection (Income-tax) came into being.

 Excess Profits Tax introduced w.e.f. 1-9-1939.
 1941

 Income-tax Appellate Tribunal came into existence.

 central charge created at Calcutta.
 1943

 Special Investigation Branches set up.

 1946

 A few officers of Class-I directly recruited.

 Demonetisation of high denomination notes made.
 Excess Profits Tax Act repealed.
 1947

 Business Profits Tax enacted (for the period 1-4-1946 to 31-3-1949).

 1951

 Report of Income-tax Investigation Commission known as Vardhachari

Commission received.
 Voluntary Disclosure Scheme introduced.
 1952

 Directorate of Inspection (Investigation) set up.

 Inspector of Income-tax declared as an I.T. authority.
 1953

 Estate Duty Act, 1953 came into existence w.e.f. 15-10-1953.

 Act XXV of 1953 gave effect to the recommendations of Commission
appointed under Taxation of Income (Investigation Commission) Act,
1947.
 1954

 Internal Audit Scheme in the Income-tax Department introduced.

  Taxation Enquiry Commission known as John Mathai Commission set
up.
 1957

 The Wealth tax Act, 1957 introduced w.e.f. 1-4-1957.

 I.R.S.(DT) Staff College started functioning at Nagpur and much later four
R.T.Is. stationed at Bombay, Calcutta, Bangalore and Lucknow opened.
 1958

 LI>The Gift-tax Act, 1958 introduced w.e.f. 1-4-1958.

 Report of Law Commission received.
 1959

 Direct Taxes Administration Enquiry Committee submitted its report.

 1960

 Directorate of Inspection (Research, Statistics & Publications)was set up.

 Two grades of Inspectors - selection and ordinary grades - merged into
one single grade.
 1961

 Direct Taxes Advisory Committee set up - Direct Taxes Administrative

Enquiry Committee constituted.
 Income-tax Act, 1961 came into existence w.e.f. 1-4-1962.
 Revenue Audit introduced for the first time in the Department.
 New system for evaluation of work done by Income-tax Officers
introduced.
 1963, 1964

 Central Board of Revenue bifurcated and a separate Board for Direct

Taxes known as Central Board of Direct Taxes (CBDT)constituted under
the Central Board of Revenue Act, 1963.
 For the first time an officer from the department became Chairman of the
CBDT w.e.f. 1-1-1964.
 The Companies (Profits) Sur -tax Act, 1964 was introduced.
 Annuity Deposit Scheme, 1964 introduced.
 1965

 Voluntary Disclosure Scheme came into operation.

 1966

 Functional Scheme introduced.

 Special Recovery Unit created.
 Intelligence Wing created and placed under the charge of Directorate of
Inspection (Investigation).
 1968

 Valuation Cell came into existence in the Income tax Department.

 Report of rationalisation and simplification of tax structure
(Bhoothalingam Committee) received.
 Administrative Reforms Commission set up.
 1969

 Direct Recruitment to Class II Income-tax Officers made.

 The post of IAC (Audit) created in the Income-tax Department.
 1970

 The posts of Addl. Commissioner of Income-tax created and abolished

after one year.
 Recovery functions which were hitherto performed by Income- tax
Officers, given to Tax Recovery Officers. Prior to that State Government
officials exercised the functions of a Tax Recovery Officer.
 1971

 A new cadre of posts known as Tax Recovery Commissioners introduced

w.e.f. 1.1.1972.
 Report of Direct Taxes Enquiry Committee received.
 Summary Assessment Scheme introduced w.e.f. 1-4-1971.
 1972

 A Special Cell within the Directorate of Inspection (Investigation) created

to oversee the cases of big industrial houses.
 A new cadre of posts known as IAC(Acq.) created and IAC appointed as
Competent Authority with the insertion of new Chapter XXA in the Income
Tax Act, 1961 on the acquisition of immovable properties in certain cases
of transfer to counter evasion of tax.
 Directorate of Organisation & Management Services (Income- tax)
created.
 The post of I.T.O. (Internal Audit) created.
 Bradma Scheme in the Income-tax Department introduced.
 System of Permanent Account Number introduced.
 Valuation Officers given statutory powers under the Income-tax Act, 1961
and Wealth-tax Act, 1957.
 1974

 Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 introduced.

 Action Plan for the Income-tax Officers introduced for the first time.
 Concept of M.B.O introduced.
 1975

 Voluntary Disclosure Scheme for Income and Wealth implemented.

 Special Cell for dealing with Smugglers' cases created.
 1976

 Settlement Commission created and Taxation Laws (Amendment)

Act,1975 inserted a new Chapter XIXA in the Income Tax Act w.e.f.1-4-
1976.
 Smugglers and Foreign Exchange Manipulators (Forfeiture of Property)
Act, 1976 introduced w.e.f. 25-1-1976.
 A new scheme for departmentalization of accounts introduced.
 Chokshi Committee submitted its interim report.
 1977

 A new cadre of posts known as IAC (Assessment) created.

 1978

 Appellate functions given to a new cadre of Commissioners known as

Commissioner (Appeals).
 Directorate of Inspection (Recovery) set up.
 A new directorate known as Directorate of Inspection (Vigilance) came
into existence by bifurcating the functions of Directorate of Inspection
(Investigation).
 Chokshi Committee submitted its final report.
 1979

 A new directorate designated as Directorate of Inspection (Publication &

Public Relations) created out of the Directorate of Inspection (RS&P).
 1980

 Hotel Receipt Tax Act, 1980 came into force w.e.f. 1.4.1981.
 1981

 Economic Administrative Reforms Commission set up.

 Three new Directorates viz. Directorate of Inspection (Intelligence),
Directorate of Inspection (Survey) and Directorate of Inspection
(Systems) created.
 Within the Directorate of Inspection (Income Tax and Audit), a separate
Director of Inspection (Audit) appointed.
 Directorate of Inspection (RS&P) re-organised and Directorate of
Inspection (P&PR) re-designated as Directorate of Inspection (Printing &
Publications).
 I.R.S.(DT) Staff College, Nagpur, re-designated as National Academy of
Direct Taxes.
 Special Bearer Bonds (Immunities & Exemptions) Act promulgated.
 Director General (Special Investigation) and Director General
(Investigation) appointed to control the functioning of various Directorates
under the control of Central Board of Direct Taxes.
 Five posts of Chief Commissioner (Administration) created.
 A few posts of Commissioner of Income-tax were earmarked as
Commissioner of Income-tax (Inv.) and Commissioner of Income- tax
(Recovery).
 1982

 Special Cell within the Directorate of Inspection (Investigation) converted

into a separate Directorate and re-designated as Directorate of
Inspection (Special Investigation).
 DIT (Systems) appointed in the Directorate of Income-tax (Organisation
and Management Services) to coordinate efforts in introducing electronic
data processing in the IT Deptt. A microprocessor based EDP system
 along with data entry system was installed heralding the era of
computerisation.
 Levy of Hotel Receipts Tax discontinued.
 Regional Training Institute at Nagpur started functioning under the control
of the National Academy of Direct Taxes.
 1983

 The vigilance set up reorganised and the strength of Dy. Director

(Vigilance) and Asstt. Director(Vigilance) augmented.
 Computerised systems for processing challans and PAN designed and
developed.
 1984

 Taxation Laws(Amendment) Act 1984 passed to streamline procedures

in the interest of better work management; avoid inconvenience to tax
payers; reduce litigation; remove anomalies and rationalise some
provisions.
 1985

 Post of Director General (Investigation) created for more effective

checking of tax evasion.
 E.D.(Amendment) Act 1985 discontinues levy of estate duty on deaths
occurring on or after 16.03.1985.
 Compulsory Deposit Scheme (Income Tax Payers) Act 1974
discontinued w.e.f. 1.4.1985.
 Interest Tax Act, 1974 discontinued w.e.f. 31.3.1985
 A new "Reward Scheme" for motivating officers introduced w.e.f.
1.4.1985.
 1986

 The I.T. Act and W.T. Act amended by Taxation Laws (Amendment and
Miscellaneous Provisions) Act :-
 Established Settlement Commission.
 Introduced Block assets concept for depreciation.
 Four offices of Appropriate Authority for acquiring property in which
unaccounted money is invested set up in metropolitan cities.
 1987

 Government's approval obtained to set up three new benches of

Settlement Commission.
 L.K. Jha Committee set up for simplification and rationalisation of tax
laws.
 Office of Directorate General (Tax Exemption) set up at Calcutta.
 The Direct Tax Law(Amendment) Act 1987 introduced uniform previous
year and redesignated the following authorities :-

 Director of Inspection
 Insp. Asstt. Commissioner of I.Tax
 Appellate. Asstt. Commissioner
  Income tax Officer Gr. A
 Income tax Officer Gr. B
 Director of Income Tax
 Dy. Commissioner of Income Tax.
 -Do- (Appeals)
 Asstt. Commissioner of I.Tax
 Income tax Officer
 Expenditure Tax Act 1987 brought into force.
 1988

 Benami Transactions Prohibition Act 1988 introduced.

 The Government announced a "Time Window Scheme" which allowed
tax payers 50% rebate of interest u/s 220(2) if they pay the tax and
balance interest. The scheme was in operation between 1.7.88 to
30.9.88.
 CIT (Central) placed under the control and supervision of Director
General (Investigation).
 Government decided that cadre control for Group 'C' and 'D' posts would
be with Chief Commissioner and with CBDT for Group 'A' and 'B'posts.
 Extension of Direct Tax Law to the State of Sikkim by a notification of the
President of India dated 7.11.1988.
 1989

 Creation of an attached office of DGIT(Management Systems) to

supervise Directorate of I.Tax(Research, Statistics, Publication & Public
Relations) and Directorate of I.Tax (Organisation and Management
Services) from Sept. 1989.
 1990

 Gift tax Bill introduced on 31.5.1990.

 Creation of 65 posts of Dy. Commissioner of I.Tax by upgradation of
equal number of posts of Asstt. Commissioner of I.Tax.
 1991

 Interest Tax Act, 1974 revived.

 Directorate of I.Tax(Systems) started reporting directly to Board.
 1992

 Rs. 1400 Presumptive Taxation scheme introduced as a measure to

widen tax base.
 The post of Director General of Income-tax (Management Systems) was
abolished.
 1993

 40 additional posts of Commissioner of Income-tax (Appeals) created.

 Authority for Advance Rulings set up.
 A comprehensive phased cadre review for Group B, C and D initiated.
 1994

 2068 additional posts in Group B, C and D sanctioned.

  New PAN introduced.
 Regional Computer Centres (RCCs) were set up in Chennai, Delhi and
Mumbai.
 1995

 New procedure for search assessment introduced.

 50 years of training commemorated and "Seminar Twenty Five"
introduced by National Academy of Direct Taxes.
 1996

 77 posts of Commissioners of Income-tax created.

 Infrastructure for operational needs strengthened.
 Study report on 4th cadre review of Group 'A' officers (IRS) of the
Department prepared by Directorate of Income Tax (Organisation and
Management Services).
 1997

 Rates of Income-tax reduced significantly.

 Legal measures to widen tax base on certain economic indicators
introduced in selected cities.
 Presumptive tax scheme discontinued.
 Voluntary Disclosure Scheme 1997 introduced.
 Minimum Alternate Tax introduced.
 National Computer Centre (NCC) was set up in Delhi.
 1998

 Sec. 260A introduced enabling direct appeals to High Court.

 1/6 Scheme & penalty for non-filing of return introduced to widen tax
base.
 Gift-tax abolished for gifts made after 1.10.1998.
 Kar Vivad Samadhan Scheme 1998 introduced.
 Silver Jubilee of Regional Training Institutes celebrated.
 Designation of Asstt. Commissioner (Senior Time Scale) changed to Dy.
Commissioner and that of Dy. Commissioner (Junior Administrative
Grade) to Joint Commissioner.
 1999

 Furnishing details of bank account and credit cards in the prescribed form
made mandatory for refund purpose.
 Prima-facie adjustments to return done away with; acknowledgments to
serve as intimations.
 Samman Scheme introduced in 1999 to honour deserving tax payers.
 2000

 The process of implementation of restructuring of the Department

commenced to increase efficiency and to deal with increased workload.
 Total sanctioned work force reduced from 61,031 to 58,315.
 Certain rationalisation measures at structural levels introduced.
 Interest-tax Act terminated with effect from 1-4-2000.
 2001

 The restructuring of the Department resulted in reducing the stagnation at

all levels and large number of personnel were promoted in various
grades.
 Jurisdiction pattern was revamped.
 New posts were created at the level of DGIT/DIT in the areas of
Research, International Taxation and Infrastructure.
 2002

 Computerised processing of returns all over the country introduced.

 Kelkar Committee Report, inter alia, recommended :-
i. Outsourcing of non-core functions of the department ;
ii. Reduction in exemptions, deductions, reliefs, rebates etc.
 The National Website of the Income Tax Department
(www.incometaxindia.gov.in) was launched to provide a vital interface
between the Department and taxpayers.
 2003

 The National Website of the Department (www.incometaxindia.gov.in)

won the Silver Medal in the category of the 'Government Websites'under
the National e-Governance Awards.
 2004

 As a measure of widening of tax base, the concept of AIR (Annual

Information Return) was introduced.
 Fringe Benefit Tax (FBT) was introduced as a major step towards
widening of tax base and bolstering of the Direct Tax Collection.
 Securities Transaction Tax (STT) was introduced.
 2005

 Tonnage Tax was introduced for the Shipping Companies.

 Banking Cash Transaction Tax (BCTT) was introduced w.e.f. 01-06-
2005.
 2006

 A project for enabling electronic filing (e-filing) of Income Tax Returns

was launched.
 Tax Return Preparer Scheme (TRPS) was launched to assist individuals
and HUF taxpayers to file their Return of Income.
 The institution of Income Tax Ombudsman set up in 12 cities throughout
the country to look into tax related grievances of the common public.
 2007

 The Refund Banker Scheme was launched in Delhi and Patna charges.
 Sevottam Scheme was launchedto standardize service delivery to the
taxpayers.
 The first citizen-friendly single window Aayakar Seva Kendra (ASK)was
setup,for centralized receipt and registration of specified categories of
documents, including income tax returns.
  The Income Tax Department became the biggest revenue mobiliser for
the Government in 2007-08, with its share increasing from 34.76%in
1997-98 to 52.75%in 2007-08.
 All India Tax Network (TAXNET) was setup connecting more than 700
offices in more than 500 cities. Consolidation of 36 (RCC) independent
regional databases into a single centralized database (PDC or Primary
Data Centre) was carried out.
 Integrated Taxpayer Data Management System (ITDMS) for drawing of
360° taxpayer profile was launched.
 2008

 Cyber Forensic Labs were setup to identify relevant digital data during
search and survey operations, recover hidden or password protected or
deleted data and store retrieved data in a manner so that it could be used
as evidence in judicial proceedings.
 Electronic filing of Income Tax Returns Project was awarded Silver
Award in the category "Outstanding Performance in Citizen Centric
Service Delivery" under the National e-Governance Awardsfor the year
2007-08.
 2009

 Centralized Processing Centre was setup in Bengaluru for bulk

processing of e-filed and paper returns. The Centre operates without any
interface with taxpayers in a jurisdiction – free manner.
 2010

 Integrated Tax Payer Data Management System (ITDMS) was conferred

the Prime Minister's Award for 'Excellence in Governance and
Administration'.
 CPC Bengaluru awarded the Gold Award for 'Excellence in Government
Process Re-engineering' under the National e-Governance Awards for
the year 2010-2011.
 To simplify the 50 years old Income-tax Act, 1961,'The Direct Taxes
Code Bill, 2010' was introduced in the Parliament.
 2011

 Foreign Tax Division of CBDT was strengthened to effectively handle the

increase in tax information exchangeand transfer pricing issues.
 Various IT initiatives were taken for efficient tax administration. These
include e-filing and e-payment of taxes, adoption of 'Sevottam' concept
by CBEC and CBDT, web based facility for tax payers to track the
resolution of refunds and credit for pre-paid taxes and augmentation of
processing capacity.
 A new simplified form 'Sugam' was introduced to reduce the compliance
burden of small tax payers falling within presumptive taxation.
 2012

 Senior Citizens (not having any income from business/profession), were

exempted from payment of advance tax.
  TRACES (TDS Reconciliation, Accounting and Correction Enabling
System) launched to serve an integrated one-stop platform for the
stakeholders to facilitate the services related to TDS operations.
 2013

 The Government approved the Cadre restructuring of the Department for

the creation of 20,751 additional posts and for carrying out various
measures to increase the effectiveness of the Department.
 Briefly, the salient features of the approved restructuring are as under:
 a. Number of assessment units (AUs) increased by 1080
from 3420 to 4500, for strengthening the tax-administration;
 b. Each Range to have one more Assessing Officer;
 c. Increase in the number` of Administrative CsIT deployed
on assessment related functions to increase from 228 to 250;
 d. 114 Special Ranges to be created, with adequate
supporting manpower;
 e. Creation of reserves numbering 620 created in the IRS
cadre;
 f. Bifurcation of the posts of the CITs in the HAG and SAG
scales, on functional basis;
 g. Upgradation of all existing 116 posts of CCsIT in HAG+
and Apex scales along with an increase of their number by 1
post;
 h. Strengthening of the training set-up with creation of three
more RTIs;
 i. Strengthening the Appellate/Advocacy Structure by
increasing the number of CIT Appeals and providing them
supporting manpower. Advocacy structure in the ITAT to be
strengthened.
 2014

 New National Website of the Income Tax Department

www.incometaxindia.gov.in launched with enhanced new features and
content.
 SIT to investigate Black Money in Swiss Bank Accounts formed
 Tax Administrative Reforms Commission (TARC) headed by Dr.
Parthasarathi Shome submitted its report of reviewing the applicability of
tax policies and tax laws in the context of global best practices and
recommending measures for reforms required in tax administration to
enhance its effectiveness and efficiency.
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