Income Tax Department of India: A Summary Assessment

Abstract

The overall development of society is the primary objective of any government and India has no exception to it. It should focus both on basic functions and on welfare and developmental activities that requires finance. Government raises finance for public necessities through tax may be direct tax or indirect tax. Tax system of India has come a long way, dating back to the colonial era till now. This paper examines the performance Income Tax Department of India during last decade. Data has been collected from secondary sources which includes the various Finance Acts, Income Tax Act 1961, Reports of CAG of India on Direct Taxes, websites of Income Tax Department, Ministry of Finance, pertains to the period from 2001-02 to 2012-13.  It is found that both direct tax and indirect tax witness an increasing trend. However, there is a structural shift in composition of tax revenue of central Government in favour of direct taxes from indirect taxes. This can be considered as a positive development on the assumption that direct taxes are more equitable in impact and pro-poor as compared to indirect taxes. Corporate tax has shown more buoyancy as compared to personal income tax during the study period. The highest number of pending is in the case Income Tax Appellate Tribunal followed by High court and then Supreme Court. Cost per rupee of personal income tax and corporate tax declined from 2.74 paisa and 0.31 paisa in 2001-02 to 1.31 paisa and 0.11 paisa respectively in 2007-08.

Keywords: Income Tax, Tax Buoyancy, Deterrence Measures