India observes the “Income Tax Day” on July 24, every year. This day was introduced in 2010, for commemorating 150 years of Income Tax in India. The day is celebrated with multiple outreach programmes and events, in a bid to promote tax payments and raise awareness among potential taxpayers that paying taxes is their duty.
History of the Day:
- James Wilson had introduced the Income Tax in India on July 24, 1860, for compensating for the losses incurred by British regime during World War I.
- This practice continued for years and in 1922 a formal structure or department was introduced to manage tax collection.
- Specific nomenclatures were given to different Income-tax authorities, under the Income-tax Act of 1922.
Amendment to Income-tax Act 1992:
- Income-tax Act 1922 was amended in 1939.
- Two important structural changes were introduced by the amendment:
- Appellate functions got separated from administrative functions
- Central charge was established in Mumbai.
Income Tax is an important component of the government’s earning. It acts as the source of funds to carry different development works across India. Over the year, system of income tax collection has undergone several changes. In the Union Budget 2022, a new direct tax structure was introduced. It proposes lower tax rates on various tax slabs. To go with the new tax structure, taxpayers are required to let go of deduction applicable in old tax regime. Under new structure, annual income below Rs 2.5 lakh is tax free.