Income Tax Law and Practice

In India, Income tax was introduced for the first time in 1860, by Sir James Wilson in order to

meet the losses sustained by the Government on account of the Military Mutiny of 1857.

Thereafter; several amendments were made in it from time to time. In 1886, a separate Income tax

act was passed. This act remained in force up to, with various amendments from time to time. In

1918, a new income tax was passed and again it was replaced by another new act which was

passed in 1922.This Act remained in force up to the assessment year 1961-62 with numerous

amendments. The Income Tax Act of 1922 had become very complicated on account of

innumerable amendments. The Government of India therefore referred it to the law commission

in1956 with a view to simplify and prevent the evasion of tax. The law commission submitted its

report-in September 1958, but in the meantime the Government of India had appointed the Direct

Taxes Administration Enquiry Committee submitted its report in 1956.In consultation with the

Ministry of Law finally the Income Tax Act, 1961 was passed. The Income Tax Act 1961 has

been brought into force with 1 April 1962. It applies to the whole of India including Jammu and

Kashmir.

Income-tax law in India

The income tax law in India consists of the following components:

1. Income tax Acts

2. Income tax rules

3. Finance Act

4. Circulars, notifications etc

5. Legal decision of courts.