Direct tax

BY AARTI UPADHYAY
ASSISTANT PROFESSOR
SAGE SCHOOL OF COMMERCE
SAGE UNIVERSITY, BHOPAL
1. History of Income Tax
2. Introduction of Income tax
3. Administration of Tax Laws
4. Meaning and Definition of Taxes
5. Types of taxes
6. Other taxes
7. Direct Taxes
8. Indirect tax
9. Who are the tax payer
10. How to file ITR
11. Documents Required for Filling
12. Important Terms
13. Assessee
14. Resident and Its Status
15. Assessment Year and Financial Year
16. Slab – New and Old
Taxation in India is rooted from the period of Manu Smriti and Arthasastra.
Indian tax system is based on theory of maximum social welfare.
According to Manu Smriti, the king should arrange the collection of taxes in
such a manner that the tax payer 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.
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.
Arthasastra mentioned that each tax was specific. Tax collectors 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 ad-valorem basis. The import duties on
foreign goods were roughly 20% of their value. Similarly, tolls, road cess, ferry
charges and other levies were all fixed.
 Introduction of Income Tax in India
The word ‘tax’ is derived from the Latin word taxare or taxo. It means ‘to assess the worth of something’.
Taxes are financial charges or a levy on a tax payer. They are given by the state or the functional equivalent of a state.
Taxes have been around for many centuries, but they started in Ancient Egypt about 3000 BC.
The Pharaoh went to everyone and collected money from them.
1764 -But taxes showed up more so in early America then 3000 BC. It first started with Molassses tax in 1764 and later

became known as the Sugar Act.

1860- The income tax as we know today was first introduced in India in 1860 by the British. It was introduced to
compensate for the losses sustained by the government due to the rebellion of 1857.
 1886 - The Income Tax Act was passed in India in 1886, and there have been constant revisions and refinements in the

Act since then.

1918- After the first World War, a new Income Tax Act was passed, in 1918, again to counter the residual effects of
economic devastation caused by the war.
1922 -This income tax Act was in place till 1922, when it was replaced by another Act. After 40 years, and 15 years
after India gained freedom from the British, the income tax Act was modified again.
1961- The current Income Tax Act has been adopted in 1961, and bought into force with effect from April 1, 1962. It
encompasses the whole of India, including Sikkim, Jammu and Kashmir.
1963 -The Central Board of Revenue bifurcated and created a separate Board for Direct Taxes called as the Central
Board of Direct Taxes under the aegis of Central Board of Revenue Act, 1963.
ADMINISTRATION OF TAX LAWS

Central Board of Direct

Taxes and Customs
Meaning & Definition of Tax
Types of Taxes
All Indirect
Taxes merged
into Goods and
Service tax on
1st July 2017
Other Taxes
 Document Required for Income tax filing
Document Required For Business ITR are: Document Required For Salaried ITR are:
PAN card PAN card
Adhara Card Adhara Card
Bank Statement (E.g., 1st Apr 2019- 31st Mar 2020) From 16
Account Detail Bank Statement (E.g., 1st Apr 2019- 31st Mar 2020)
Mail id Salary Slip of three Month
Purchases and Sales detail of Business in Financial year Account Detail
Income and Expense detail of Business in Financial year Mail id
Asset and Liabilities detail of Business in Financial year Policy Detail(if any)
Policy Detail(if any) Loan Detail(if any)
Loan Detail(if any)

Document Required for Interest Income:
TDS Certificate issued from Bank
Passbook, Bank Statement from Interest on Saving Account
Income from Interest Fixed Deposit
Document Required for Claim Expenses as Deductions:
The maximum amt we can claim under section 80C is 1.5
lakhs
Children's tuition fee contribution.
Contribution toward Provident Fund.
Life Insurance Premium paid
Home loan principal amount repayment.
 Important Terms

 Assessee
 Assessment Year (A.Y. 2021‐22)
 Previous Year (F.Y. 2020‐21)
 Residential Status
 Gross Total Income
 Deductions
 Total Income
Definition of 'Assessee' – Section 2(7) of Income Tax.
As per S. 2(7) of the Income Tax Act, 1961, unless the context
otherwise requires, the term “assessee” means a person by whom
any tax or any other sum of money is payable under this Act, and
includes

 Person in respect of whom any proceedings under this Act has

been taken for assessment of his income
 Deemed assessee under provisions of this Act
 Any person deemed to be an assesse in default under any
provisions of this Act
Exercise:-
 Important Terms

Residential Status
 Resident–World income is taxable in India
 Non Resident(NRI)–Only income arising or accruing in India is taxable in India
 Resident but Not Ordinarily Resident–Income accruing or arising outside India may also be
taxable in India

Resident: On basis of stay in India computed separately every year

If satisfies any of the below condition:
1. He is in India for a period of 182 days or more in the FY
OR
2. He is in India for 60 days or more during that FY and has been in India for 365 days or more during 4
previous years immediately preceding the relevant Financial Year.
 Important Terms

Assessment Year (A.Y. 2021‐22):

Assessment year means the period starting from
April 1 and ending on March 31 of the next year.

Previous Year (F.Y. 2020‐21)

The financial year immediately preceding the
assessment year