What are the Duties Performed by Income Tax Departments ?

The Income Tax Department has to discharge a variety of functions. The Indian Revenue Service Officers are responsible for administrating fiscal laws like the Income Tax Act, Wealth Tax Act , Interest Tax Act etc. The immediate object is to collect tax and to detect and check tax evasion. They also have duty towards the tax paying public. They advise the public of their rights and duties as part of creating an environment of mutual trust between the department and the public The second role of the department is to help in achieving the socio-economic objectives of the government through planned tax legislation and thus contribute to the implementation of the governments' wider polices . The department also n  negotiates and implements wide ranging Double Taxation Avoidance Agreements.

On our next post, we're going to discuss about various Acts related to Income Tax in India.

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What is Income Tax ? Meaning and Definition of Income Tax

 

 Income tax is one of the important direct tax. Every country in the world charges tax on income now. It is necessary because it is a financial source to conduct government's operations. There is a 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 derived 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 the entire world should be taxed. In Greece, Germany and Roman Empires, taxes were also levied sometime on the basis of turnover and sometimes on occupations. These levies and taxes in various forms and on various commodities and professions were imposed to meet the needs of the Governments. The amount so collected is used to meet the military and civil expenditure. It ensures safety to the subjects and to meet the common needs of the citizens like maintenance of roads, administration of justice and such other functions of the State.

Apart from this progressive income taxation is designed to distribute wealth more evenly in a population. It serves as automatic fiscal stabilizer to mitigate the effects of economic cycles. Income tax is a yearly charge levied on earned income such as wages, salaries, commission and unearned income (dividends, interest, and rents)

India has a well-developed tax structure. The Constitution of India empowers the legislature to enact and enforce tax laws. The constitution declares income tax to be a central subject. Income tax on all types of income except agricultural income, is charged and collected by the central government. Expenses in connection with collection of tax are deducted out of the total tax. The balance amount is known as net proceeds. Net proceeds of income tax are apportioned between central and state government on the basis of the recommendation of the finance commission. Presently nearly 80 % of the tax proceeds are distributed to states. The Central government levies direct taxes such as personal income tax and corporate tax, and also indirect taxes like customs duties, excise duties and central sales tax. The states in turn are empowered to levy state sales tax, entertainment tax etc. apart from various other local taxes like entry tax, octroi, etc. 

On our next article, we're going to discuss about various duties of Tax departments and Income Tax Act. Stay tuned!

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About this Blog

Welcome to the "Income Tax Law Blog"!

First of all, it's appropriate to set out the goals and objectives of this blog, and what it seeks to contrive. Very simply, it is nothing more than a humble effort to provide the most current and comprehensive information, touching the various aspects of Income Tax in India.
As to the scope of the blog, the title “Income Tax- Law And Practice” somewhat underplays its real breadth. It is intended to cover all areas of the Income tax law that affect the operation of companies in India. 

Taxation has a key role in shaping fiscal policy of the government. India has a well developed tax structure with the authority to levy taxes divided between the central government and the state government. the central government levies direct taxes such as personal income tax and corporate in come tax, and indirect taxes like custom duties and central sales tax. In the wake of the economic reforms, the tax structure and procedures have been rationalized and simplified In spite of these developments, many people find it difficult to grasps the subject properly. This blog is therefore, written to serve as an introduction material to discuss various provisions of income tax law.

Hope you enjoy and benefit from reading this blog.

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