Direct taxes in the form an income tax were introduced by the British in India in 1860 to overcome the difficulties created by the Indian Rebellion of 1857.[7] The organisational history of the Income-tax Department, however, starts in the year 1922, when the Income-tax Act, 1922 gave, for the first time, a specific nomenclature to various Income-tax authorities. In 1924, the Central Board of Revenue Act constituted a Central Board of Revenue - the statutory body with functional responsibilities for the administration of the Income-Tax Act.
Commissioners of income tax were appointed for each province and assistant commissioners and tax officers were placed under their control.[8] Officers from the Imperial Civil Services (ICS) manned top posts and the lower echelons were filled through promotions from the ranks. The Income Tax Service was established in 1944, which was subsequently re-constituted as the Indian Revenue Service (Income Tax) in 1953.
In 1963, given the increasingly complex roles and responsibilities of administering direct tax in India, the Central Board of Direct Taxes was constituted as a statutory body under the Central Board of Revenue Act, 1963.
The IRS comprises two branches, IRS (Income Tax) and IRS (Customs and Indirect Taxes), controlled by two separate statutory bodies, the Central Board of Direct Taxes (CBDT) and the Central Board of indirect taxes and Customs (CBIC). The duties of the IRS (IT) include providing tax assistance to taxpayers, pursuing and resolving instances of erroneous or fraudulent tax filings, and formulating and enforcing policy concerning income tax in India. The duties of the IRS (C&IT) include formulation and enforcement of policy concerning the Goods and Services Tax, prevention of smuggling and administration of matters related to Customs and Narcotics.
In the 2015 fiscal year, the IRS (IT) processed 3,91,28,247 returns[4] and collected ₹6.95797 lakh crore (equivalent to ₹7.8 trillion or US$110 billion in 2018) in gross revenue, spending ₹6 (equivalent to ₹7.00 or 10¢ US in 2018) for every ₹1,000 (equivalent to ₹1,100 or US$16 in 2018) it collected.[5] The relative contribution of direct tax to the overall tax collection of the Central Government has risen from about 36% to 56% over the period of 2000–01 to 2013–14. The contribution of direct tax-to-GDP has doubled (from about 3% to 6%) during the same period
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