Central Board of Direct Taxes [CBDT]

By : Neha Dhyani

Updated : Mar 31, 2022, 12:38

The Central Board of Direct Taxes (CBDT) is a statutory authority functioning under the Central Board of Revenue Act, 1963. The CBDT is a part of the Department of Revenue in the Ministry of Finance, Government of India. It is responsible for administering direct taxation acts passed by the Parliament of India.

Central Board of Direct Taxes [CBDT] - Overview

As the Department's apex body charged with the administration of taxes, the Central Board of Revenue came into existence due to the Central Board of Revenue Act. The CBDT is the administrative authority for enforcing the direct tax laws comprising personal income tax, corporate tax, wealth tax and excise duty. It is also responsible for administering tax Deducted at Source (TDS).

The CBDT is the administrative authority for implementing and administering the direct tax laws through Income Tax Department.

Mission Central Board of Direct Taxes [CBDT]

To administer direct taxes to promote equity, transparency and simplicity in tax laws; ensure expeditious redressal of taxpayer grievances and optimize taxpayer services; formulate tax policies and strategies in sync with the economy's needs, taking into account global best practices.

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Formation of Central Board of Direct Taxes [CBDT]

The Board is a statutory authority functioning under the Direct Taxes Administration in India. It reports to the Economic Affairs Secretary, Ministry of Finance and consists of six members drawn from the Indian Revenue Service and other allied services as follows:

  • Chairman (Head/Secretary-level officer)
  • Member(s) (Additional Secretaries to Government of India)
  • Special Invitees (Joint Secretaries to Government of India)

It is also responsible for administering the provisions of the Double Taxation Avoidance Agreements with other countries and providing relief to taxpayers following the provisions of these agreements.

Through its three tiers comprising the field formations, the Board and its policy-making body viz., the Central Board of Direct Taxes (CBDT), are responsible for administering direct tax laws through Income Tax Department.

Significance of Central Board of Direct Taxes [CBDT]

The CBDT provides essential inputs for policy and planning of direct taxes in India and is responsible for administering the direct tax laws through Income Tax Department. The CBDT has six members, each responsible for different areas like Personnel & Vigilance, Investigation, International Taxation, Legislation and Computerisation, Administration and Judicial.

The role of the CBDT is to ensure that sufficient funds are available to meet government expenditure during any financial year, which is done by imposing various direct taxes like Income Tax, Corporate Tax, Wealth Tax etc. In particular, the CBDT has been tasked with framing policy guidelines for the efficient administration of revenue collection regarding direct taxes.

Responsibilities of Central Board of Direct Taxes [CBDT]

The main responsibility of CBDT is to provide vital inputs for policy and planning of direct taxes in India and to enforce direct tax laws and measures for the development of the Indian economy.

The Department has also closely monitored large cash deposits made by people post demonetization. During this process, it came across certain cases where cash deposited was more than the income declared in the income returns filed by such persons.

The Central Board of Direct Taxes (CBDT) awards primacy to attracting voluntary compliance besides streamlining the procedures for taxation and collection, promoting transparency and establishing accountability for revenue target attainment.

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FAQs on the Central Board of Direct Taxes [CBDT]

Q.1. What are the Objectives of the Central Board of Direct Taxes [CBDT]?

The government formed the Central Board of Direct Taxes [CBDT] in 1964 with the main objectives of rationalizing and simplifying Income-tax related procedures, increasing public awareness among assessees regarding their tax obligations and enforcing effective implementation of tax laws. It is responsible for framing policies relating to direct taxes of the country. The Board also administers exemptions, deductions, refunds and other incentives available to taxpayers.

Q.2. What is the Central Board of Direct Taxes [CBDT]?

The Government of India established the Central Board of Direct Taxes [CBDT] in 1964 as an apex organization to advise, supervise and co-ordinate the work of the Income-tax Department. It is also responsible for framing all policies related to Income Tax in India.

Q.3. What additional roles are performed by The Central Board of Direct Taxes [CBDT]?

The Central Board of Direct Taxes (CBDT) also advises the government on all direct tax matters, drafts legislation relating to the issues concerning direct taxes promotes voluntary compliance, etc.

Q.4. Who leads the Central Board of Direct Taxes [CBDT]?

The Chairman, who also serves as the ex-officio secretary in special relations to the government of India, leads the Central Board of Direct Taxes [CBDT].