Taxation Law

 Introduction to Taxation Law in India

Taxation law in India forms the legal backbone of the country’s revenue system, empowering the government to levy and collect taxes from individuals, businesses, and other entities. These laws are essential for financing public services such as infrastructure, education, healthcare, and national security. Broadly, Indian taxation is categorized into direct taxes, which are levied on income and profits, and indirect taxes, which are imposed on the consumption of goods and services. The legal framework is primarily governed by the Income Tax Act, 1961 for direct taxes and the Goods and Services Tax (GST) Act, 2017 for indirect taxes. These statutes are supplemented by annual Finance Acts, rules, circulars, and judicial interpretations. The administration of tax laws is overseen by two key bodies: the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC). Together, they ensure compliance, enforcement, and policy implementation. As India’s economy evolves, so too does its tax regime—striving for transparency, equity, and efficiency in revenue collection.

 Direct Tax Laws

1. Income Tax Act, 1961 Governs taxation on income earned by individuals, firms, and companies. It includes provisions for tax computation, exemptions, deductions, and penalties.
2. Wealth Tax Act, 1957 (Abolished in 2015) Earlier imposed tax on the net wealth of individuals and HUFs. Now replaced by a surcharge on the super-rich.
3. Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 Targets undisclosed foreign income and assets held by Indian residents. Includes strict penalties and prosecution.
4. Benami Transactions (Prohibition) Act, 1988 (Amended in 2016) Prohibits holding property in someone else’s name to evade taxes. The amended law allows confiscation and prosecution.

 Indirect Tax Laws

1. Goods and Services Tax (GST) Act, 2017 A unified tax replacing VAT, excise, and service tax. Applies to supply of goods and services across India.
2. Customs Act, 1962 Regulates import and export duties. Also governs procedures for clearance of goods and penalties for violations.
3. Central Excise Act, 1944 (Largely subsumed under GST) Earlier applied to manufacturing of goods in India. Now relevant only for a few products like petroleum and tobacco.
4. Service Tax (Chapter V of Finance Act, 1994) (Now subsumed under GST) Was levied on services provided in India. Replaced by GST in 2017.

Other Relevant Laws

1. Finance Act (Annual) Passed every year to give effect to the Union Budget. It amends tax rates and introduces new provisions.
2. Taxation Laws (Amendment) Acts Used to make structural changes in tax laws, such as corporate tax rate cuts or dispute resolution schemes.
3. Equalisation Levy (under Finance Act, 2016) Aimed at taxing digital transactions and online advertising by foreign companies.