Q.Trace briefly the history of Income Tax in India. In your answer, state the year in which the Act currently in force was passed, the date from which it took effect, and the authority that administers it today.

Income tax in India has been through several Acts before reaching its present form, each building on the shortcomings of the one before it.

Income tax was first introduced in 1860 to cover the Government's losses after 1857, followed by more organised Acts in 1886, 1918 and 1922. The comprehensive Income Tax Act, 1961 replaced all of these and took effect from 1st April 1962.

A full account of India's Income Tax history moves through five stages: the temporary 1860 Act (introduced by Sir James Wilson to recover the Government's post-1857 financial losses), the 1886 Act (the first to classify income under separate heads), the 1918 Act (which widened the definition of income), the comprehensive 1922 Act (the first to set up a proper all-India tax administration machinery), and finally the Income Tax Act, 1961, passed by Parliament and effective from 1st April 1962. This 1961 Act consolidated and replaced every earlier income tax law and remains the principal statute governing income tax in India even today, amended every year through the Finance Act. It is administered by the Central Board of Direct Taxes (CBDT), functioning under the Department of Revenue, Ministry of Finance.

Students often name only the 1961 Act and skip the 'effective from 1st April 1962' date, or confuse the CBDT (Direct Taxes) with the CBIC (Indirect Taxes, including GST) as the administering authority — keep the two boards and the two tax categories they administer clearly separate.