History of taxation in India

Income is the money that a person or company gets in return for giving something of value to others. Since the Maurya period, India has had a codified tax system in place. The wealthier residents paid taxes equal to one-sixth of their income.

One of India's oldest books, Manu Smriti, is thought to have made reference to taxation before the Mauryas. The later Mughal conquerors brought their own revenue regime with them. The notorious Jezia was a levy placed on the nation's non-Muslim citizens. Akbar did away with it in India.

You can get to know more at section 80g of income tax act.

In 1860, the British first implemented the income tax as we know it today in India. The government suffered losses as a result of the 1857 insurrection, thus it was implemented to make up for those losses. Income tax is the yearly fee assessed on both earned income (wages, salaries, or commissions) and unearned income (such as dividends, interest, or rent).

Progressive income taxes are intended to more equitably divide wealth creation throughout a population and act as a safety net in case of economic cycle variations in addition to providing funding for a government's activities. Income taxes exist in two primary forms: personal income tax and corporate income tax.

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Since India's 1886 passage of the Income Tax Act, it has undergone several amendments and improvements. In order to combat the lingering consequences of the economic destruction brought on by the First World War, a new Income Tax Act was created in 1918. The income tax act was in effect until 1922, when a new act took its place. After 40 years and 15 years following India's independence from the British, the income tax act was once more altered.

The present Income Tax Act was passed in 1961 and went into effect on April 1st, 1962. It includes Jammu & Kashmir, Sikkim, and the entirety of India. The Central Board of Revenue split into two entities and established the Central Board of Direct Taxes under the authority of the Central Board of Revenue Act, 1963.

Many different taxation methods have been mentioned in both Manu Smriti and Arthasastra. A thoughtful taxation system existed even in ancient times, as demonstrated by the in-depth analyses Manu Smriti and Arthasastra presented on the matter. Not only that, but taxes were also levied against numerous groups of people, including performers, dancers, singers, and even dancing girls. In the past, taxes were paid in the form of gold coins, animals, crops, raw resources, and even by doing individualised service.

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