Context:
As per the recent reports of the Central Board of Direct Taxes (CBDT), a record six crore 77 lakh Income Tax Returns, have been filed for 2023-24.
Central Board of Direct Taxes
The Central Board of Direct Taxes (CBDT) is a federal agency that reports to the Ministry of Finance of the Government of India. It is India’s highest policy-making body for increased taxation. The CBDT is responsible for framing policies and procedures related to direct taxation, including income tax, corporate tax, wealth tax, and capital gains tax. It also oversees the administration of these taxes by the Income Tax Department and other subordinate authorities.
The CBDT consists of a Chairman and six Members. The Chairman is appointed by the President of India, while the Members are nominated by the Minister of Finance on the recommendation of the CBDT itself. The term of office of Chairman and Members is three years.
Background of CBDT
The CBDT full form is the Central Board of Direct Taxes. It is a government agency that is responsible for administering the direct tax laws in India. The CBDT was established in 1963 and it has been responsible for several important reforms in the Indian taxation system. Some of these include the introduction of the presumptive income scheme, the rationalization of rates under the Income Tax Act, and more recently, the GST regime. The CBDT is also responsible for the collection and administration of taxes on capital gains and dividends.
What Does The CBDT Do?
The primary functions of the CBDT are to:
- Enforce direct tax laws in India
- Collect taxes on income and capital gains
- Administer and oversee the Income Tax Department and other subordinate authorities
- Frame policies and procedures related to direct taxation
- Review the working of the Income Tax Department
- Conduct studies on direct tax administration and policy matters
The CBDT also plays a role in promoting taxpayer education and awareness. It has launched several initiatives to promote financial literacy among taxpayers, including an online course on income tax filing. The CBDT is also responsible for overseeing the implementation of the Goods and Services Tax (GST) in India.
Powers of CBDT
The Central Board of Direct Taxes (CBDT) in India possesses various powers to administer and enforce direct taxes. These powers include:
Administrative Powers: CBDT exercises administrative control over the Income Tax Department and oversees its functioning at the national level.
Rule-Making Powers: CBDT has the authority to make rules and issue guidelines for the implementation and enforcement of direct tax laws in India.
Power to Grant Exemptions and Approvals: CBDT has the power to grant exemptions, relaxations, and approvals under certain provisions of the Income Tax Act, such as exemptions for charitable organizations or specific transactions.
Power to Conduct Tax Audits: CBDT has the power to conduct tax audits, either through its officers or by appointing external auditors, to examine and verify the accuracy and compliance of tax-related information.
Authority to Impose Penalties: CBDT can impose penalties for non-compliance, including the failure to file tax returns, underreporting of income, or any violation of tax laws.
Power to Conduct Surveys and Search Operations: CBDT can authorize surveys and search operations to gather information, detect tax evasion, and seize assets in accordance with the provisions of the Income Tax Act.
Power to Requisition Information: CBDT has the authority to requisition information, documents, or statements from individuals, banks, or other entities for the purposes of tax assessment and investigation.
Power to Make Appellate Decisions: CBDT exercises appellate powers to hear and decide on appeals filed against orders passed by income tax authorities, providing a higher level of scrutiny and resolution for tax-related disputes.
Power to Enter into International Agreements: CBDT has the power to enter into international agreements, such as Double Taxation Avoidance Agreements (DTAA), to prevent double taxation and facilitate the exchange of information with other countries.
FAQs about Central Board of Direct Taxes
Q1: What is the CBDT, and what is its role in India’s taxation system?
A1: The CBDT, or Central Board of Direct Taxes, is a key government agency responsible for administering and framing policies related to direct taxes such as income tax, corporate tax, wealth tax, and capital gains tax. It also oversees the functioning of the Income Tax Department and plays a significant role in taxation matters.
Q2: How is the CBDT structured, and who appoints its members?
A2: The CBDT consists of a Chairman and six Members. The Chairman is appointed by the President of India, while the Members are nominated by the Minister of Finance based on recommendations from the CBDT. Their term of office is three years.
Q3: What are the primary functions of the CBDT?
A3: The CBDT is responsible for enforcing direct tax laws, collecting taxes on income and capital gains, framing taxation policies and procedures, administering the Income Tax Department and its subordinate authorities, reviewing their working, conducting studies on tax administration, and promoting taxpayer education.
Q4: What reforms and initiatives has the CBDT introduced in India’s taxation system?
A4: The CBDT has played a crucial role in various reforms, including the introduction of the presumptive income scheme, rationalizing tax rates, and adapting to the Goods and Services Tax (GST) regime. It also promotes taxpayer education and awareness through initiatives like online courses on income tax filing.
Read also:- Goods and Services Tax Network (GSTN)
