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All About Income Tax Department

Income Tax is a percentage of an individual’s income that is paid to the government to run the nation smoothly, fund infrastructural development, pay salaries for those employed by the state or central governments etc., and is governed by the Income Tax Act, 1961. The Income Tax Department is the government agency that takes care of this process. Let’s look at it in detail.

Income Tax Department: A Comprehensive Guide

Any individual, whether a resident or an NRI, whose place of origin is India and who gets an income in the country falls in the slab of IT. Hence, he/she is eligible for tax payment. Income Tax Department or the IT Department is a government agency that is primarily responsible for monitoring the income tax collection in India. It takes care of the inflow of various taxes and their subsequent collection on behalf of the Government of India. This department functions under the Department of Revenue of the Ministry of Finance. Here’s a glimpse of 5 sub-categories of incomes that fall under Income tax departments jurisdiction:

  • If you have a salaried income, your pension and salary fall into this category.

  • If you are earning from other sources, remunerations from fixed deposits, interest on your savings account, etc.

  • If you have a real estate or a property, it falls into the category of rental income.

  • If you are gaining from capital investments, your earnings from selling these assets in the form of market shares, house property and mutual funds shall fall into this category.

  • If you are an entrepreneur or a businessman, you fall into the category of “self-employed individuals”. Lawyers, doctors, CAs, and teachers encompass this category.

Management

Being a part of the Department of Revenue in the Ministry of Finance, The Central Board of Direct Taxes (CBDT) provides inputs for policy and planning of direct taxes in India. This Board is also majorly responsible for administration of direct tax laws through the IT Department. The CBDT is a statutory authority that functions under the Central Board of Revenue Act, 1963. This government body, that is headed by the Chairman, comprises of six members, all of whom are ex-officio Special Secretary to the Government of India.

The Chairman and members of the CBDT are selected from Indian Revenue Service (IRS). These members constitute the top management of the IT Department. These members are responsible for collective decision making of discharge of statutory functions of the CBDT and of the Union Government under the various direct tax laws. This also includes designing policies regarding:

  • Setting up and structure of Income Tax Department

  • Methods and procedures of work of the CBDT

  • Measures for disposing off assessments, collection of taxes, prevention and detection of tax evasion and tax avoidance

  • Recruitment, training and all other matters relating to service conditions and career prospects of all personnel of the Income tax Department

  • Laying down of targets and fixing of priorities for disposal of assessments and collection of taxes and other related matters

  • Write off of tax demand exceeding Rs.25 lakhs in each case

  • Policy regarding grant of rewards and appreciation certificates

Roles and Responsibilities

Apart from monitoring the process of inflow of taxes and their collection by the Indian Government, The IT Department is also responsible for enforcing the Double Taxation Avoidance Agreements. They are also liable to deal with various aspects of international taxation such as Transfer pricing. The Income Tax Department seeks grant from Finance Act, 2012 the power to combat aggressive Tax avoidance by enforcing General Anti Avoidance Rules.

The Chairman and every member of CBDT is responsible for exercising supervisory control over definite areas of field offices of IT Department, known as Zones. Numerous functions and responsibilities of the Central Board of Direct Taxes are distributed amongst Chairman and six members, with only fundamental issues reserved for collective decision by the CBDT.

FAQs

What does it take to get recruited in the IT Department?

In order to get recruited in the IT Department, a candidate must first apply for Civil Services Examination conducted by UPSC every year. The eligibility criteria to apply for this exam is to have a graduation degree from a recognized university. The minimum age limit to appear for this exam is 21 years and maximum 30 years. There are four attempts for candidates who are eligible for this post which a preliminary examination is conducted through which candidates are shortlisted for the main exam (written examination).

Those who qualify for the written exam are then called for the personal interview. Depending on the marks they secure in the main (written) exam and interview, a merit list is prepared. This list determines the choice of service. Note that the options exercised by the candidate in the application are also kept in mind.

What are the anti-black money measures taken by the IT department?

In order to bring anti-black money measures to action, the Finance Ministry has instructed all revenue intelligence agencies to join the crackdown on forex traders, as well as hawala operators and jewellers besides tracking movement of demonetised currency notes. Post this, the Income Tax departments raided various illegal tax-evasive businesses in Delhi, Mumbai, Chandigarh, Ludhiana and other cities that traded with demonetized money. The Enforcement Directorate also issued FEMA notices to several forex and gold traders. Large sum of cash in defunct notes were seized in various parts of India. In Chhattisgarh alone, liquid cash worth of ₹4.4 million was recovered.

In 2016, December, the Income Tax department received over 4000 emails on black money holders in India, within 3 days, when Income Tax Department, issued in public notice an email to report black money.

Seizures of new Rs. 2000 notes

Huge amounts of cash in the form of new notes were also seized from all over the country after the demonetisation. In December 2016, over Rs. 4 crore in new Rs. 2000 notes were seized from four persons. Also, in Bangalore Rs. 33 lakh in Rs. 2000 notes were recovered in West Bengal. Rs. 1.5 crore was seized in Goa. Almost 900 notes of the new Rs. 2000 denomination were seized in Tamil Nadu. Around Rs. 10 crore in new notes were seized in Chennai.

As of 10 December, Rs. 242 crore in new notes had been seized.

It was announced by the government that the seized notes will be brought into the mainstream as soon as possible to ease out the cash problem.

What are the taxation acts that the IT Department is responsible for?

The IT department is responsible for administering the following direct taxation acts passed by Parliament of India:

  • The Income-tax Act, 1961

  • Expenditure Tax Act, 1987

  • Various Finance Acts (Passed Every Year in Budget Session)

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