Commemorating India’s Fiscal Milestone: National Income Tax Day – The Introduction of Income Tax

Income Tax Day, celebrated on July 24, marks the inception of income tax in India by Sir James Wilson in 1860, a pivotal event in the country’s fiscal history. This initial tax aimed to levy income from various sources, as outlined in Section 2(24) of the Income Tax Act.

Although the 1860 implementation laid the groundwork, the Income-tax Act of 1922 truly revolutionized the nation’s tax system. This comprehensive Act not only formalized the organization of income tax authorities but also established an administrative framework that continues to underpin modern tax administration in India.

According to a government release, the Central Board of Revenue Act of 1924 further enhanced this structure by making the Board a statutory body responsible for administering the Income-tax Act. During this period, Commissioners of Income Tax were appointed for each province, supported by Assistant Commissioners and Income Tax Officers.

In 1957, the IRS Staff College was founded to promote professional development, with Group A officers initially trained in Bombay and Calcutta from 1946. Computerization began in 1981 to process electronic challans, and in 2009, the Central Processing Centre in Bengaluru was established to facilitate efficient bulk processing. Income Tax Day celebrates these milestones and the ongoing efforts to modernize India’s tax system.

Key Milestones in the Indian Income Tax System

• 1860: Introduction of Income Tax by Sir James Wilson
• 1922: Establishment of the Comprehensive Income-tax Act
• 1924: Formation of the Central Board of Revenue Act
• 1946: Recruitment of Group A officers
• 1957: Inception of the IRS (Direct Taxes) Staff College, later renamed the National Academy of Direct Taxes
• 1981: Beginning of computerization in the Income-tax Department
• 2009: Establishment of the Centralized Processing Centre (CPC) in Bengaluru
• 2014: Launch of the new national website of the Income Tax Department
• 2020: Introduction of the “Vivad se Vishwas” scheme to reduce litigation and increase government revenues
• 2021: Launch of the new e-filing portal

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