Taxation in India has existed since ancient times. Taxation was considered as a sacred duty in Vedic times. It finds its references in many ancient books.Kautilya’s ‘Arthashstra’ deals with taxation in an elaborate and planned manner suggesting ways to guide a king in running the state in an efficient and fruitful manner. According to him, treasury is the root of administration (‘kosh moolo dandah’).
Travelling through medieval era the taxation in India was practised in different ways till it was introduced by Sir James Wilson on July 24, 1860 as a tax selectively imposed on the rich, royalty and Britishers. Since then there have been a number reforms to realise the crucial role of Income Tax Department not only to finance the government but also to establish social welfare schemes. As a result taxation in India has now acquired a modern look.
Following are the recent initiatives for modernisation and taxpayer services:
The website of the Department www.incometaxindia.gov.in was launched in the year 2003 to provide a host of informational, interactive and transactional services to the Taxpayers.
Tax Information Network (TIN) was established to integrate primary information of tax collection, tax deduction and third party information. The system allows the Department to create separate account for each PAN holder.
An All India Tax Network (TAXNET) was setup in 2007 by consolidating 36 independent regional databases into a single centralized database (PDC or Primary Data Centre) at Delhi with a Business Continuity site at Mumbai & limited Disaster Recovery site at Chennai. It created 2.5 TB consolidated database which was one of the largest databases of Government of India. 718 Income Tax offices in 520 cities are part of this network.
Taxpayers have the facility to pay their taxes online, through ATMs, Debit Cards or Cheques at agency bank branches across the country.
In 2006-07 the high impact and high visibility project for electronic filing (e-filing) of Income Tax Returns was launched. Returns could be filed online using digital signature, without digital signature, or through e-Return intermediaries. In the first year 3.63 Lakh taxpayers used this facility. The number has now grown to 92 Lakhs in the year 2010-11.
Tax Return Preparer Scheme was launched in 2006 to assist individual and HUF taxpayers to file their Return of Income. The Department trained nearly 4700 unemployed or under employed graduates at 100 centers across the country to enable them to prepare Returns of taxpayers at marginal cost. The scheme used Online Learning Management System for distance learning for the first time.
Income Tax Ombudsman
In 2006, the institution of Income Tax Ombudsman was set up in 12 cities throughout the country to look into tax related grievances of the common public.
The Refund Banker Scheme was launched in January 2007 in Delhi and Patna charges. Data of Refunds determined by the Assessing Officer gets transferred to the Refund Banker (State Bank of India) which issues refund through Electronic Clearing System (ECS) in cases where MICR code is available or through Cheque, if MICR is not available. The scheme has now been extended to the whole country.
Sevottam Scheme was launched in the year 2007 to standardize service delivery to the taxpayers. The Department identified the services delivered to different taxpayer segments and promised definite time lines for delivery of these services. The first citizen friendly single window Aayakar Seva Kendra (ASK) to rollout these services was setup at Pune. Today 15 ASK centres are functional in the country.
Integrated Taxpayer Data Management System (ITDMS) for drawing of 360° taxpayer profile was launched in 2007. The system creates 360° profile by using huge volume of data available from internal and external databases and builds individual profiles, family relationships etc. by using sophisticated data mining tools and search engine. ITDMS has provided an exceptionally potent tool to the investigation wing for non-intrusive investigation.
Cyber Forensic Labs were setup in 2008 to identify relevant digital data during search and survey operations, recover hidden or password protected or deleted data and store retrieved data in a manner so that it could be used as evidence in judicial proceedings.
Centralized Processing Centre was setup in Bengaluru in 2009 for bulk processing of e-filed and paper returns. The Centre operates without any interface with taxpayers in a jurisdiction – free manner. The Centre processed 86.9 lakh returns in 2010-11. To replace the 50 years old Income-tax Act, 1961, simplified ‘The Direct Taxes Code Bill, 2010’ was introduced in the Parliament in 2010.