ANALYSIS OF INCOME TAX IN INDIA

The government of India imposes an income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as body of individuals and association of persons) and any other artificial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue under the Ministry of Finance, Govt. of India. There are close to 35 million income tax payers in India. Charge of Income Tax Income tax is charged in assessment year at rates specified by the Finance Act applicable on 1st April of the relevant assessment year. It is charged on the total income of every person for the previous year. Total Income is to be computed as per the provisions of the Act. Income tax is to be deducted at source or paid in advance wherever required under the provision of the Act. Who imposes and who pays? The government of India imposes an income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as body of individuals(BOI) and association of persons(AOP)) and any other artificial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue under the Ministry of Finance, Govt. of India. There are close to 35 million income tax payers in India.

Residential Status
The three residential status, viz.,

Resident Ordinarily Residents

Under this category, person must be living in India at least 182 days during previous year Or must have been in India 365 days during 4 years preceding previous year and 60 days in previous year. Ordinary residents are always taxable on their income earned both in India and Abroad.

Resident but not Ordinarily Residents

Must have been a non-resident in India 9 out of 10 years preceding previous year or have been in India in total 729 or less days out of last 7 years preceding the previous year. Not residents are taxable in relation to income received in India or income accrued or deemed to be accrue or arise in India and income from business or profession controlled from India.

Non Residents

Non Residents are exempt from tax if accrue or arise or deemed to be accrue or arise outside India. Taxable if income is earned from business or profession setting in India or having their head office in India.

Residential Status of Individual The residential status of individual will be determined as under-

Basic Conditions u/s 6(1): i. ii. He must be in India for a period of 182 days or more during the previous year; or He must be in India for a period of 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year. Additional Conditions u/s 6(6): i. He must be a non-resident in India in nine out of the ten previous years preceding that year; or ii. He must be in India during 7 preceding previous years for aggregate period of 729 days or less. Residential Status of HUF The residential status of HUF depends upon the control and management of its affairs. Resident HUF: If the control and management of the affairs of HUF is situated wholly or partly in India then HUF is said to be Resident in India. Non- Resident HUF: If the control and management of the affairs of HUF is situated wholly outside India then HUF is said to be Non- Resident in India.

 Not Ordinarily Resident HUF: A resident HUF is said to be Not Ordinarily Resident in India if Karta or manager thereof, satisfies any of the additional conditions u/s 6(6). Residential Status of a firm According to section 6(3) an Indian Company is always Resident in India. A foreign Company will be resident in India if Control or Management of its affairs is wholly situated in India. Residential Status of a firm or AOP or other person depends upon control and management of its affairs. Resident: If the control and management of the affairs of a firm or AOP or other person is situated wholly or partly in India then such a firm or AOP or other person is said to be resident in India. Non-Resident: If the control and management of the affairs of a firm or AOP or

other person is situated outside India then such a firm or AOP or other person is said to be non-resident in India. Incidence of Tax

TAX RATES

Surcharge & Cess Surcharge has been abolished for personal income tax from the financial year 2009-10. A 7.5% surcharge (tax on tax) is applicable if the taxable income (taking into consideration all the deductions) is above Rs. 10 lakh (Rs. 1 million). The limit of 10 lacs was increased to Rs. 1 crore (Rs. 10 million) with effect from 1 June 2009 for domestic companies. All taxes in India are subject to an education cess, which is 3% of the total tax payable. With effect from assessment year 2009-10, Secondary and Higher Secondary Education Cess of 1% is applicable on the subtotal of income tax. The education cess is mainly applicable on excise duty and service tax From income tax year 2010-11, education cess would be 3% and no surcharge would be levied. Heads of Income The total income of a person is divided into five heads, viz., taxable Income from Salary Income from House property Income from Business or Profession Income from Capital Gains Income from Other Sources
Income from Salary All income received as salary under Employer-Employee relationship is taxed under this head. Employers must withhold tax compulsorily, if income exceeds minimum exemption limit, as Tax Deducted at Source (TDS), and provide their employees with a Form 16 which shows the tax

deductions and net paid income. In addition, the Form 16 will contain any other deductions provided from salary such as: 1. Medical reimbursement: Up to Rs.15,000 per year is tax free if supported by bills. 2. Transport allowance: Up to Rs.800 per month (Rs.9,600 per year) is tax free if provided as transport allowance. No bills are required for this amount. 3. Conveyance allowance:is tax exempt. 4. Professional taxes: Most states tax employment on a per-professional basis, usually a slabbed amount based on gross income. Such taxes paid are deductible from income tax. 5. House rent allowance: the least of the following is available as deduction 1. Actual HRA received 2. 50%/40%(metro/non-metro) of basic salary 3. Rent paid minus 10% of 'salary'. basic Salary for this purpose is basic+DA forming part+commission on sale on fixed rate. Income from salary is the least of all the above deductions. Perquisites and Exemptions u/s 10 The term "Perquisite" includes value of any benefit or amenity/value of any concession provided by the employer to the employees. Perquisite Valuation does not include certain medical benefits. Section 10 exemptions are available for the following perquisites:
1. Leave Travel Concession u/s 10(5) 2. Perquisites paid to Indian Citizens Employed Abroad 10(7) 3. Tax Paid on Behalf of Any Employee by the Employer 10(10CC)

Income from House property Income from House property is computed by taking into account what is called Gross Annual Value of the property. The annual value (in the case of a let out property) is the maximum of the following:

Rent received 7

Municipal Valuation Fair Rent (as determined by the IT department)

If a house is not let out and not self-occupied, annual value is assumed to have accrued to the owner. Annual value in case of a self occupied house is to be taken as NIL. (However if there is more than one self occupied house then the annual value of the other house/s is taxable.) From this, deduct Municipal Tax paid and you get the Net Annual Value. From this Net Annual Value, deduct :

30% of Net value as repair cost (This is a mandatory deduction) No other deduction available Interest paid or payable on a housing loan against this house

In the case of a self occupied house interest paid or payable is subject to a maximum limit of Rs,1,50,000 (if loan is taken on or after 1 April 1999 and construction is completed within 3 years) and Rs.30,000 (if the loan is taken before 1 April 1999). For all non self-occupied homes, all interest is deductible, with no upper limits. The balance is added to taxable income. Income from Business or Profession The income referred to in section 28, i.e., the incomes chargeable as "Income from Business or Profession" shall be computed in accordance with the provisions contained in sections 30 to 43D. However, there are few more sections under this Chapter, viz., Sections 44 to 44DA (except sections 44AA, 44AB & 44C), which contain the computation completely within itself. Section 44C is a disallowance provision in the case non-residents. Section 44AA deals with maintenance of books and section 44AB deals with audit of accounts. In summary, the sections relating to computation of business income can be grouped as under: 1. Deductible Expenses - Sections 30 to 38 [except 37(2)]. 2. Inadmissible Expenses - Sections 37(2), 40, 40A, 43B & 44-C. 3. Deemed Incomes - Sections 33AB, 33ABA, 33AC, 35A, 35ABB & 41. 8

4. Special Provisions - Sections 42 & 43D 5. Self-Coded Computations - Sections 44, 44A, 44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB, 44-D & 44-DA.

The computation of income under the head "Profits and Gains of Business or Profession" depends on the particulars and information available. If regular books of accounts are not maintained, then the computation would be as under: Income (including Deemed Incomes) chargeable as income under this head xxx Less: Expenses deductible (net of disallowances) under this head xxx Profits and Gains of Business or Profession xxx However, if regular books of accounts have been maintained and Profit and Loss Account has been prepared, then the computation would be as under: Net Profit as per Profit and Loss Account Add : Inadmissible Expenses debited to Profit and Loss Account Deemed Incomes not credited to Profit and Loss Account Less: Deductible Expenses not debited to Profit and Loss Account Incomes chargeable under other heads credited to Profit & Loss A/c Profits and Gains of Business or Profession xxx xxx xxx xxx xxx xxx xxx xxx

Income from Capital Gains Transfer of capital assets results in capital gains. A Capital asset is defined under section 2(14) of the I.T. Act, 1961 as property of any kind held by an assessee such as real estate, equity shares, bonds, jewellery, paintings, art etc. but does not include some items like any stock-in-trade for businesses and personal effects. Transfer has been defined under section 2(47) to include sale, exchange, relinquishment of asset, extinguishment of rights in an asset, etc. Certain transactions are not regarded as 'Transfer' under section 47.

For tax purposes, there are two types of capital assets: Long term and short term. Long term asset is that which is held by a person for three years except in case of shares or mutual funds which becomes long term just after one year of holding. Sale of such long term assets gives rise to long term capital gains. There are different scheme of taxation of long term capital gains. These are:
1. As per Section 10(38) of Income Tax Act, 1961 long term capital gains on shares or securities or mutual funds on which Securities Transaction Tax (STT) has been deducted and paid, no tax is payable. STT has been applied on all stock market transactions since October 2004 but does not apply to off-market transactions and company buybacks; therefore, the higher capital gains taxes will apply to such transactions where STT is not paid. 2. In case of other shares and securities, person has an option to either index costs to inflation and pay 20% of indexed gains, or pay 10% of non indexed gains. The indexation rates are released by the I-T department each year. 3. In case of all other long term capital gains, indexation benefit is available and tax rate is 20%.Long Term Capital Gain Calculator 4. For the purpose of calculating long term Capital Gain/loss, Cost Inflation Index (CII) is notified by The Central Government of India. Categorized Cost Inflation Index for F.Y 1981-82 to F.Y 20111Z.

All capital gains that are not long term are short term capital gains, which are taxed as such:

Under section 111A, for shares or mutual funds where STT is paid, tax rate is 10% From Asst Yr 2005-06 as per Finance Act 2004. For Asst Yr 2009-10 the tax rate is 15%.

In all other cases, it is part of gross total income and normal tax rate is applicable.

For companies abroad, the tax liability is 20% of such gains suitably indexed (since STT is not paid). Income from Other Sources This is a residual head, under this head income which does not meet criteria to go to other heads is taxed. There are also some specific incomes which are to be taxed under this head.
1. Income by way of Dividends 10

2. Income from horse races 3. Income from winning bull races 4. Any amount received from key man insurance policy as donation. 5. Income from shares (dividend otherthan Indian company)

Deductions Deductions to be made [Section 80A] : The total income of an assessee is to be computed after making deductions permissible u/s 80C to 80U. However, the aggregate amount of deductions cannot exceed the Gross Total Income. No deduction from certain (following) Incomes : Long term Capital Gains referred u/s 112, and Short Term Capital gains referred u/s 111A. Winnings from lotteries, races, etc. as referred to in section 115BB. Incomes referred to in section 115A (1) (a), 115AC, 115ACA, 115AD, Section 80C Deductions Section 80C of the Income Tax Act allows certain investments and expenditure to be deducted from total income up to the maximum of 1 lac. The total limit under this section is Rs. 100,000 ) which can be any combination of the below: Contribution to Provident Fund or Public Provident Fund. PPF provides 8.6% return compounded annually. Maximum limit to contribute in it is 100,000 for each year. It is a long term investment with complete withdrawal not possible till 15 years though partial withdrawal is possible after 5 years. Besides, there is employee providend fund which is deducted from the salary of the person. This is about 10% to 12% of the BASIC salary component.

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EPF has the option of full settlement on leaving the job, taking VRS, retirement after 58. It also has options of withdrawal for certain expenses related to home, marriage or medical.

EPF contribution includes 12% of basic salary from employee and employer. It is distributed in ratio of 8.33:3.67 in Pension fund and Providend fund Payment of life insurance premium Investment in pension Plans. National Pension Scheme is meant to save money for the post retirement which invests money in different combination of equity and debt. depending upon age up to 50% can go in equity. Annuity payable after retirement is dependent upon age.

Investment in Equity Linked Savings schemes (ELSS) of mutual funds Investment in National Savings Certificates (interest of past NSCs is reinvested every year and can be added to the Section 80 limit) Tax saving Fixed Deposits provided by banks for a tenure of 5 years. Interest is also taxable. Payments towards principal repayment of housing loans. Also any registration fee or stamp duty paid. Payments towards tuition fees for children to any school or college or university or similar institution (Only for 2 children). Post office investments The investment can be from any source and not necessarily from income chargeable to tax.

Section 80CCF Investment in Infrastructure Bonds From April, 1 2011, a maximum of Rs. 20,000 is deductible under section 80CCF provided that amount is invested in infrastructure bonds. This is in addition to the 100,000 deduction allowed under Section 80C

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Section 80D Medical Insurance Premiums Health insurance, popularly known as Mediclaim Policies, provides a deduction of up to Rs. 35,000.00 (Rs. 15,000.00 for premium payments towards policies on self, spouse and children and (read as in addition to) Rs. 15,000.00 for premium payment towards nonsenior citizen dependent parents or Rs. 20,000.00 for premium payment towards senior citizen dependent). This deduction is in addition to Rs. 1,00,000 savings under IT deductions clause 80C. Interest on Housing Loans Section For self occupied properties, interest paid on a housing loan up to Rs 150,000 per year is exempt from tax. This deduction is in addition to the deductions under sections 80C, 80CCF and 80D. However, this is only applicable for a residence constructed within three financial years after the loan is taken and also the loan if taken after April 1, 1999. If the house is not occupied due to employment, the house will be considered self occupied. For let out properties, the entire interest paid is deductible under section 24 of the Income Tax act. However, the rent is to be shown as income from such properties. 30% of rent received and municipal taxes paid are available for deduction of tax. The losses from all properties shall be allowed to be adjusted against salary income at the source itself. Therefore, refund claims of T.D.S. deducted in excess, on this count, will no more be necessary. Section 80DD Maintenance of A Dependant Being Person With Disability Deduction is available in respect of expenditure incurred for medical / treatment / nursing / training/ rehabilitation, or amount paid under scheme LIC / UTI other insurer approved by CBDT for maintenance, of a dependant, being a person with disability.
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Deduction shall be allowed to the extent of Rs. 50,000 (Rs. 1,00,000 in case of dependant suffering with severe disability exceeding about 80% ), irrespective of expenditure incurred or sum paid.

Section 80DDB Actual expenditure incurred on Medical treatment of Self or dependant or a member of HUF suffering from terminal diseases like Cancer, AIDS, Renal failure etc. for Rs.40,000. (b) For Senior Citizens(self or dependent on whom expenditure on medical treated is taken) is Rs.60,000. Section 80E Interest on Loan taken for Higher Education Deduction is available in respect of sum paid by the assessee in the previous year, out of his income chargeable to tax, by way of interest on loan taken for his higher education, or for the higher education of his relative. 100% of the amount of interest on such loan Deduction will be admissible.

Section 80G Deduction in respect of Donations Deduction is allowed under this section to all assesses in respect of donations of sum of money in the following manner 100% deduction will be allowed if donations are given to any of the 19 specified funds. 50% deduction will be allowed if donations made to any of the 5 specified funds100% deduction shall be allowed subject to the qualifying amount if donations are made for promoting family planning. 100% deduction shall be allowed subject to the qualifying amount if donations are made for promoting family planning.
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Section 80GG Rent actually paid for any furnished or unfurnished residential accommodation occupied by the Individual, who is not in receipt of any House Rent Allowance (HRA). The deduction shall be allowed to the extent of least of the following Rs. 2,000 per month; 25% of adjusted total income; Rent paid less 10% of adjusted Total Income Section 80U Deduction in respect of person with permanent physical Disability Eligible Assessee: Individual resident in India, who, at any time during the previous year, is certified by the medical authority to be a person with disability Deduction: Rs. 50,000 (Rs. 1,00,000 for severe disability). Severe disability means 80% or more of disability. Use of Deductions While the use of the above sections helps one to make savings for the long-term, one should look at this more as an investment-return opportunity. Except ELSS (Equity Linked Savings Scheme) and the NPS (National Pension Scheme), other schemes under 80C typically offer a relatively risk-free investment and guaranteed returns. Advance Tax Every person is liable to pay tax on income in advance i.e. from completion of the previous year (advance tax) if tax payable is Rs. 5,000 or more. All items of income are liable for payment of advance tax. However, from Assessment 2010-2011 liability to pay advance tax arises, if the tax payable is Rs. 10,000 or more

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Due Dates

Default in payment of Advance Tax [Sec. 234B] Under section 234B(1), interest is payable as follows:

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Deferment of Advance Tax[Sec. 234C] Interest is payable under section 234C if an assessee has not paid advance tax or underestimated installments of advance tax. Simple Interest at the rate of 1% per month is payable for period 3 months for each installment due Assessment Procedures Time for filing Return of Income [Sec. 139(1)]

Filing of Return in Electronic Form [Sec. 139D] Section 139D has been inserted from June 1, 2006. It provides that the Board may make rules providing for the class or classes of persons who shall be required to furnish the return of income in electronic form; the form and the manner in which the return of income in electronic form may be furnished;

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the documents, statements, receipts, certificates or audited reports which may not be furnished along with the return of income in electronic form but shall be produced before the Assessing Officer on demand;

the computer resource or the electronic record to which the return of income in electronic form may be transmitted.

Filing of Return after Due Date [Sec. 139(4)] If the return is not furnished within the time allowed under section 139(1) or within the time allowed under section 142(1), the person may (before the assessment is made), furnish the return of any previous year at any time before the end of one year from the end of relevant assessment year. Consequences of Late Submission If return is submitted after the due date of submission of return of income, the following consequences will be applicable. These rules are applicable even if a belated return is submitted within the time-limit given above The assessee will be liable for penal interest u/s 234A. A penalty of Rs. 5,000 may be imposed u/s 271F if belated return is submitted after the end of assessment year. If return of loss is submitted after the due date, a few losses cannot be carried forward. If return is submitted belated, deduction under section 10A, 10B, 80-IA, 80-IB, 80IC, 80-ID and 80-IE will not be available. Interest for defaults in furnishing Return of Income [Section 234A] If any person fails to furnish his return of income u/s 139 for any assessment year or furnishes such return after due date specified in section 139(1), then, he will liable to pay interest at the rate of 1% per month for the period beginning from the date immediately following the due date of furnishing return of income and ending on the Date of
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furnishing the return or completion of assessment, whichever is earlier, calculated on the amount of self-assessment tax payable. Tax Penalties The major number of penalties initiated every year as a ritual by I T Authorities is under section 271(1)(c) which is for either concealment of income or for furnishing inaccurate particulars of income. "If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person(b) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,(ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum of ten thousand rupees for each such failure; (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. e-Filing of Returns The process of electronically filing Income tax returns through the internet is known as eFiling. It is mandatory for Companies and Firms requiring statutory audit u/s 44AB to submit the Income tax returns electronically from AY 2007-08 onwards. Any Company/Firm requiring statutory audit u/s 44AB return submitted without a e-Filing receipt will not be accepted. e-filing is possible with or without digital signature.

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Digital signature is mandatory for Companies from AY2010-11 onwards.

Types of e-Filing There are three ways to file returns electronically Option 1: Use digital signature in which case no paper return is required to be submitted Option 2: File without digital signature in which case ITR-V form is to submitted to CPC Bengaluru within 120 days of efiling. This is a single page receipt cum verification form. Option 3: File through an e-return intermediary who would do e-Filing and also assist the Assessee file the ITR V Form .

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Change in Procedure of e-Filing

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e-Filing Process At a glance Select appropriate type of Return Form Download Return Preparation Software for selected Return Form. Fill your return offline and generate a XML file. Register and create a user id/password Login and click on relevant form on left panel and select "Submit Return" Browse to select XML file and click on "Upload" button On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form. New IT Returns Annexure-less Forms

For Individuals, HUF Select appropriate Income Tax Return (ITR) Preparation Software 1 Income from Salary/Pension Income from Other 2 Sources (only Interest income or Family Pension) 3 Income/Loss from Other Sources Income/Loss from House Property Capital Gains/Loss on sale of investments/property ITR-1 Individual ITR-2 ITR-3 ITR-4 ITR-4S

Individual & HUF

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6 7

Partner in a partnership Firm Income from Proprietary Business/Profession

Income from presumptive Business

For Association of Persons (AoP), Body of Individuals (BoI), Local Authority, Companies, Trusts, Fringe Benefit Tax (FBT) Return Select appropriate Income Tax Return (ITR) Preparation Software Firms, AoP, BoI, LA,LLP 1 Income/Loss from Other Sources 2 Income/Loss from House Property 3 Capital Gains/Loss on sale of investments/property 4 Income/Loss from Business Companies Trusts Only FBT ITR-5 ITR-6 ITR-7 ITR-8

Fringe Benefit Tax

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Please note ITR-7 will not be available for e-Filing. ITR-8 is discontinued for e-Filing from AY2010-11 onwards, still continued for AY2007-08,200809,2009-10. In case the return is digitally signed, on generation of "Acknowledgement" the Return Filing process gets completed. You may take a printout of the Acknowledgement for your record. In case the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form (ITR-V). A duly signed ITR-V form should be submitted to CPC using Ordinary Post or Speed Post within 120 days of transmitting the data electronically. This completes the Return filing process for non-digitally signed Returns. Permanent Account Number (PAN) A new provision relating to Tax Deduction at Source (TDS) under the Income Tax Act 1961 became applicable with effect from 1st April 2010. Tax at higher of the prescribed rate or 20% will be deducted on all transaction liable to TDS, where the Permanent Account Number (PAN) of the deductee is not available. The Law will also apply to all non-residents in respect of payments / remittances liable to TDS. PAN is Tax Id under Indian Income Tax Act and as per new amendment even foreign companies intending to receive payments taxable under Indian Income Tax Act are required to quote Indian PAN. However following payments are not subject to withholding tax and therefore foreign companies are not require to quote PAN.

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Sample of the income tax statement

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Income tax calculator http://financeminister.in/income_tax_calculator.php Income Tax Department

The CBDT is a part of Department of Revenue in the Ministry of Finance. On one hand, CBDT provides essential inputs for policy and planning of direct taxes in India,at the same time it is also responsible for administration of direct tax laws through the Income Tax Department. The Central Board of Direct Taxes is a statutory authority functioning under the Central Board of Revenue Act, 1963 passed by shrimaan ayush singla. The officials of the Board in their exofficio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes. The Central Board of Revenue as the Department apex body charged with the administration of taxes came into existence as a result of the Central Board of Revenue Act, 1924. Initially the Board was in charge of both direct and indirect taxes. However, when the administration of taxes became too unwieldy for one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs with effect from 1.1.1964. This bifurcation was brought about by constitution of the two Boards u/s 3 of the Central Boards of Revenue Act, 1963. Income Tax in India was introduced by James Wilson. Organisational Structure of the Central Board of Direct Taxes : The CBDT is headed by Chairman and also comprises of six members, all of whom are Special Secretary to Government of India. Member (Income Tax)

Member (Legislation and Computerisation) Member (Revenue) Member (Personnel & Vigilance) Member (Investigation) Member (Audit & Judicial)
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The Chairman and Members of CBDT are selected from Indian Revenue Service (IRS), a premier civil service of India, whose members constitute the top management of Income Tax Department.

Responsibilities of Chairman and Members, Central Board of Direct Taxes

Various functions and responsibilities of CBDT are distributed amongst Chairman and six Members, with only fundamental issues reserved for collective decision by CBDT. In addition, the Chairman and every Member of CBDT are responsible for exercising supervisory control over definite areas of field offices of Income Tax Department, known as Zones. "The special agents and agents(ITO and Inspector rank) are able to carry firearms when they are posted in the Directorate of Criminal Investigation (DCI) in the I-T department .The Finance Ministry has notified bringing under one umbrella the intelligence and criminal investigation units of the Income Tax department to effectively deal with terror financing cases and transactions that pose threat to national security.The department will now recruit special agents and agents (criminal investigation) under the new wing, half of whom would be recruited or brought on deputation from premier investigative agencies and police organisations of the country. The special agents who will form part of the premier DCI would be able to carry firearms under the rules prescribed by their parent organisation and would be able to tackle any intimidation in course of their new duty of checking and gathering intelligence on tax evasion. With the process of economic liberalisation having gathered momentum there have been significant changes in the nature of tax evasion. While there has been reduction in conventional smuggling due to liberalisation of import regime and reduction in rates of duty, there is no respite in commercial frauds by way of misdeclaration/undervaluation of imported goods and misuse of export promotion schemes. Further, we now face an increased threat of smuggling of narcotic drugs, foreign currency, arms and explosives etc. due to growing nexus between smugglers and anti-national elements. Problems such as international terrorism, narco-terrorism, money laundering, IPR violations, cyber crimes, import of hazardous substances etc. will occupy centre stage in the future as the emerging global threats. There are also issues like dumping of goods which cause more concern to developing economies like India and will, therefore, engage attention of the policymakers and enforcement agencies alike.
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Economic crimes in India, like in other countries, are linked to several other offences, or even organised crimes, having bearing on national security. A greater degree of sophistication is being noticed in the activities of tax evasion and commercial frauds and there is a growing recognition in the world that the economic offences are, many times, part of other serious crimes posing serious threat to the security of the nation. The DCI will be headed by the Director General of Intelligence (Income Tax) and was notified in May this year to tackle the menace of black money with cross-border ramifications. The revamp is aimed at launching 'un-intrusive' investigations against "persons and transactions suspected to be involved in criminal activities having cross-border, inter-state or international ramifications, that pose a threat to national security and are punishable under the direct tax laws."The commissioners of the intelligence directorate of I-T who are posted in cities like Delhi, Chandigarh, Jaipur, Ahmedabad, Mumbai, Chennai, Kolkata and Lucknow will also take up criminal investigation work under the DCI. Criminal investigation relies heavily on accurate and specific actionable intelligence and information of such activities and hence such an arrangement has been made.Separate manpower for the criminal investigation unit will be raised in the next few years when the department gets additional sanction.The intelligence wing of the I-T department has the Central Information Branch (CIB) under it, which is a repository of classified and exhaustive data on taxpayers' financial transactions. The Criminal Investigation strategic plan is composed of three interdependent programs: Legal Source Tax Crimes; Illegal Source Financial Crimes; and Narcotics Related Financial Crimes. These three programs are mutually supportive, and encourage utilization of all statutes within CIs jurisdiction and enforcement techniques to combat tax, money laundering and currency crime violations. Criminal Investigation must investigate and assist in the prosecution of those significant financial investigations that will generate the maximum deterrent effect, enhance voluntary compliance, and promote public confidence in the tax system.

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Directorate of Income-tax (IT)

This Directorate has two wings i.e. (A) Inspection- Board exercises efficient control and inspection of the work of the Income-tax officers throughout the country. (B) Examination Centralised Conduct of departmental examinations for departmental promosions Directorate of Inspection (Audit) Ensures expeditious disposal and settlement of receipt audit objections and also review the work done in the different Commissioner Charges.

Directorate of Inspection (Research, Statistics and Public Relation)

The main functions of this Directorate are research study on tax matters, printing of All India Revenue Statistics, preparation of taxpayers Information series, Departmental publications, publicity and public relations.

Directorate of Organisation & Management Services

This Directorate has been assigned the job of Administrative Planning, Organisational Development, Management Information Systems and Work Measurement.

Directorate of Inspection (Vigilance)

The main functions of this Directorate are conducting departmental enquiries, drafting of charge sheets, presenting the cases on behalf of the Department, preparing the enquiry reports against charged officials extra and passing of final orders.

Directorate of Income-tax (Systems)

This Directorate performs the functions of Management Information System, Computerization in the Department and Designing of uniform system of computerisation for Income Tax Department.

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Directorate of Income-tax (Infrastructure)

This Directorate will assist CBDT in attending to infrastructure matters.

Director General of Income Tax (Intelligence)

Criminal investigation relies heavily on accurate and specific actionable intelligence and information of such activities and hence such an arrangement has been made.Separate manpower for the criminal investigation unit will be raised in the next few years when the department gets additional sanction.The intelligence wing of the I-T department has the Central Information Branch (CIB) under it, which is a repository of classified and exhaustive data on taxpayers' financial transactions. The main function of this Directorate are conducting departmental enquiries, drafting of charge sheets, presenting the cases on behalf of the Department, preparing the enquiry reports against charges officials extra and passing of final orders.The Criminal Investigation strategic plan is composed of three interdependent programs: Legal Source Tax Crimes; Illegal Source Financial Crimes; and Narcotics Related Financial Crimes. These three programs are mutually supportive, and encourage utilization of all statutes within CIs jurisdiction and enforcement techniques to combat tax, money laundering and currency crime violations. Criminal Investigation must investigate and assist in the prosecution of those significant financial investigations that will generate the maximum deterrent effect, enhance voluntary compliance, and promote public confidence in the tax system.

Director General of Income-tax (Training)

The National Academy of Direct Taxes, Nagpur is the premier training institution in the country for the officers and the staff of the Income-tax Department. Its primary task is to impart inductions training to the directly recruited Indian Revenue Service Officers The Academy imparts training to officers and staff of the Income-tax Department in coordination with its 5 Regional Training Institutes located at Bangalore, Calcutta, Hazari Bagh, Lucknow and Mumbai.1421.0.

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