Brief history of income tax in India
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The first Income-tax Act in India was introduced in 1860 on account of financial stress owing to the mutiny of 1857 and was to be in force for a period of 5 years. The concept of the aggregate income from all sources was not material except for determining the minimum taxable limit. Agricultural income from lands above a rental value of Rs. 600/- per annum was included for tax. The Act lapsed in 1865. The tax was revived in 1867 in the form of a ‘license tax’ on trades and professions on the basis of annual income. Tax was deducted from the salaries provided to government servants. This Act was in force for one year. The improvement of the financial situation by 1873 saw the abolition of income tax in that year. The great famine of 1876-1878 brought about the revival of direct taxation by the Act of 1877. Now there was a license tax on the trader combined with a cess on land. Act II of 1886 was the first important landmark in the history of income-tax in India. Its basic scheme has end