Historical background of tax

WHAT IS TAX, TYPES OF TAX, DIRECT TAX AND INDIRECT TAX, WHY PAY TAXES. HISTORY OF TAXES IN INDIA

1. INCOME TAX- HISTORICAL BACKGROUND Prepared by : C A ANNIE STEPHEN

2. WHAT IS TAX The   word  ' tax ' first appeared in the English language only in the 14th century. It is derived from the  Latin word   ” taxare ” which means 'to assess‘ It is also derived from the word ‘ taxo ’ which means estimate

3. Lay man’s perspective It is also termed as LEVY CHARGE PAYMENT TO THE GOVERNMENT IMPOSITION EXCISE TOLL

4. DEFINITION MERRIAM WEBSTER : :  a charge, usually of money imposed by authority, on persons or property for public purposes CAMBRIDGE: (an amount of) money paid to the government that is based on your income or the cost of goods or services you have bought.

5. ORIGIN OF TAX Originated nearly 2000- years ago Luke 2:1 reads : “ And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed.” It is estimated to have been declared after Census of Quirines ( stated that every person has to be registered) in the year 6 CE.

6. Earlier the motive of tax was

7. why TAX now

8. FLIPPING THROUGH THE PAGES OF HISTORY… The GENESIS

9. The history of tax dates back to… The first known system of taxation was in Ancient Egypt in the years 3000-2800 BC in the First Dynasty of Egypt of the Old Kingdom of Egypt. It was classified into two types – Corvee and Tithe Corvee is a form of unpaid labour , intermittent of nature and which lasts for a limited period of time ie . For a certain number of days in a year Tithe is one tenth of something which is generally paid to any religious organization or compulsorily to the government.

10. The trend passed on to the persians A regulated and a sustainable tax system was introduced by Darius I the Great in Persian Empire in 500 BC The system of taxation was specially designed by the different Satray or provincial governor at their own discretion. There would be around 20-30 Satrays in the empire and they would decide the amount of tax to be paid based on the productivity.

11. Zakat and jizya Islamic rulers imposed these two types of taxes- Zakat and Jizya Zakat is the form of alms giving treated as religious obligations or tax which in Islamic ranking is next after prayer in importance Jizya is the per capita yearly taxation historically levied in the form of financial charge on non resident muslim subjects of a state governed by Islamic law in order to fund public expenditure instead of Zakat paid by the resident Muslims.

12. Caesar augustus Around 6 CE Stated that the whole world should be taxed.

13. Bible reference (book of ST LUKE CHAPTER 2:1)

14. History of taxes in india In India, the system of direct taxation as it is known today has been in force in one form or another even from ancient times.

15. MANU SMRITI & ARTHASHASTRA Manu, the law giver laid down that traders and artisans should pay 1/5th of profits in silver and gold A griculturists were to pay 1/6th,1/8th or 1/10th of their produce depending on their circumstances War loans were raised during emergencies

16. What arthshastra had to say Arthashastra mentioned that each tax was specific and there was no scope for arbitration. The land revenue was fixed at 1/6 share of the produce Import and export duties were determined on ad-valorem basis. The import duties on foreign goods were roughly 20% of their value. Similarly , tolls, road cess , ferry charges and other levies were all fixed

17. Varthanam AND DVARODAYA LEVY COLLECTED ON ALL IMPORTS OF FOREIGN GOODS

18. YATRAVETANA LEVIED ON PILGRIMS

19. VANIKPATH INCOME FROM ROADS AND TRAFFIC PAID AS POLLS

20. RELIGIOUS TAX- BALI

21. TAX IN CASH- KARA

22. LAND TAX- SITA

23. Other forms of tax in ancient india CONSTRUCTION TAX (VĀSTUKA) SURVEY TAX (RAJJU) POLICE TAX (CHORARAJJU) TAX ON VILLAGES ON THE WATER (KLŖPTA) GENERAL TAX ON VILLAGES (PIŅDAKARA) EMERGENCY TAX (PRAŅAYA) CELEBRATION TAX (UTSANGA) WAR TAX (SENĀBHAKTA)

24. Types of tax

25. Direct tax The impact and incidence is on the same persons Examples: Income Tax

26. Indirect tax The impact and incidence is on different persons. Example- GST

27. Differences CONTEXT DIRECT TAX INDIRECT TAX Imposition Imposed on income or profits Imposed on goods and services Taxpayer Individuals, HUFs, firms and companies End-consumer of the goods and services Applicability Applicable to the taxpayer alone Applicable to every stage of the production-distribution chain Tax burden The burden falls directly on the individual The burden is shifted to the consumer by the manufacturer or service provider

28. What is income tax Income tax  refers to annual  taxes  levied by the federal government and most state governments on individual and business  income .

29. Income tax coined Income Tax   was introduced by  James Wilson  in 1860, as the then Finance Member  of  the India Council that advised the Viceroy  of  India. He introduced the Income Tax Act,1860 also gave India's first Budget Speech. It was introduced to meet the expenses and losses suffered due to the first Freedom Movement in 1857

30. In 1918, a new income tax was passed and again it was replaced by another new act which was passed in 1922 . In consultation with the Ministry of Law finally the Income Tax Act, 1961 was passed. The Income Tax Act 1961 has been brought into force with 1 April 1962. It applies to the whole of India and Sikkim (including Jammu and Kashmir). Since 1962 several amendments are made in the Income Tax Act by the Union Budget every year.

31. REFERENCES https://trendaap.com/product/old-currency-india / https:// www.merriam-webster.com/thesaurus/taxes https:// dictionary.cambridge.org/dictionary/english/tax https:// www.britannica.com/topic/taxation/History-of-taxation https:// www.jagranjosh.com/general-knowledge/history-of-taxation-in-india-1481028305-1 https:// en.wikipedia.org/wiki/Census_of_Quirinius https://www.keepbelieving.com/caesar-a-tax-plan-that-changed-the-world / https://www.indiamart.com/proddetail/indirect-tax-planning-services-21847859991.html