Paying taxes is an obligation that every Indian citizen is supposed to fulfil. And to help citizens follow through with their duty, the Government of India and the Income Tax* Department have simplified the process of paying taxes and filing tax* returns online. However, the process of tax* collection dates back to the times when scriptures.
In today’s time, the collection of taxes is based on the taxpayer’s income and category, much like it was in ancient times. Since then, the Indian tax* system has changed dynamically in various ways. Today, even filing income tax* returns on life insurance in India can be carried out online on the official Income Tax* Department website.
Here is a brief outline of how far the direct taxes have come.
Direct tax* is the type of tax* that is paid by the taxpayer on their income, earnings and profits. This tax* is not levied on goods and services but on the taxpayer. The taxpayer can be an individual or an organisation, and the tax* is collected by the authority that imposes it, i.e., the Government of India and is a source of revenue for the government.
An important feature of direct taxes is that the responsibility of paying it cannot be passed on to another person or entity, as in the case of indirect taxes.
The first tax* structure was laid out by the Income Tax Department in 1922 that outlined specific terminologies for Income Tax* authorities. Since 1922, the changes and amendments in the Indian Tax System have been quite rapid. The second World War, during which the business communities made excellent profits, also saw the introduction of the Excess Profits Tax* and Business Profits Tax* between 1940-1947, which were then repealed in 1946. The administration of this tax* that was handed over to the Income Tax* Department was also repealed in 1949.
But most importantly, there were numerous policy and administrative tax reforms were carried out.
For instance, under policy reforms, tax* rates were lowered, tax laws, especially the ones concerning capital gains, were simplified, measures for presumptive taxation were brought in, and the tax* base was widened.
Under administrative reforms, the tax* collection system was computerised, which involved allotting unique identification numbers to taxpayers, and human resources were realigned to meet the business needs of the department.
The tax* system at the Income Tax Department was computerised in 1981 when the Directorate of Income Tax* (Systems) was set up. Three computer centres using SN-73 systems were set up between 1984-85 in metropolitan cities for processing challans. By 1989, 33 major cities had this setup, and computerised activities started the allotment of PAN (Permanent Account Number) and TAN (Tax Collection Account Number) and the accounting of payroll.
The major landmarks in the digitisation of the taxation system were the e-filing of tax* returns and the electronic payment of taxes through the official Income Tax* Department website. In 2006, filing tax returns was digitised with a project that helped in e-filing (electronic filing) of income tax* returns. A centralised processing centre (CPC) was launched in Bengaluru in 2009 for the purpose of bulk processing of e-filed and paper returns without any jurisdiction.
One of the major benefits of electronic filing of returns and online tax* payments is that there is less scope for manual errors in the tax* collection process, and taxpayers can save a lot of time with online tax* payments and when filing online tax* returns.
As of today, these are the different types of direct taxes that can be paid online.
However, this does not apply to an individual, a Hindu Undivided Family (HUF) or a Partnership if the total adjusted income is below ₹20 Lakh.
Saving methods such as insurance policies in India, though taxable in the hands of the policyholder, also offer tax* benefits. With a life insurance policy from Tata AIA life insurance , you can claim tax* deductions and benefits on the policy premiums and the proceeds as per the prevailing tax* laws.
Over the years, it is not only the taxation system but also the Income Tax* Department and its rules that have undergone a number of organisational and regulatory changes. In keeping with the times, after the computerisation of the tax* process, digitisation also took over, enabling taxpayers to access their tax* statements from anywhere, through any electronic device.
Along with these changes, the Indian tax* system has seen an increase in revenue collection, redesigned business processes and more improvement in tax-payer services. L&C/Advt/2022/Sep/2327