India's Income Tax History: From British Era to Budget 2026

• Income tax was first introduced in India in 1860 by Sir James Wilson, British India's first Finance Member, to address the financial crisis after the 1857 Sepoy Mutiny.
• The first Income Tax Act was approved on July 24, 1860, leading to Income Tax Day being celebrated annually on this date.
• Initially, the tax was temporary, abolished in 1865, but later reintroduced in 1867 and 1886.
• The current system operates under the Income Tax Act, 1961, implemented from April 1, 1962, building on the 1860 foundation.
• The tax was initially levied on annual earnings above ₹200, with rates between 2% and 4%, primarily targeting the wealthy, landlords, traders, and British officials.

Why It Matters: India's income tax system, a legacy from 1860, began to fund British administration and now supports national development.