RAS question
Direct taxes in India are administered by:
Correct answer: (A) Central Board of Direct Taxes (CBDT).
Direct taxes in India are administered by the Central Board of Direct Taxes, or CBDT.
Explanation
CBDT is the correct answer because it is the body responsible for administering various direct taxes in India. The cited RBI Master Circular states that CBDT administers direct taxes through Commissioners of Income Tax located across the country, and that these Commissioners handle the collection and refund of Income Tax and Corporation Tax under the Income Tax Act, 1961. This matches the basic economy distinction tested here: direct taxes such as Income Tax and Corporate Tax fall under CBDT, while indirect taxes such as GST and Customs fall under CBIC. Both boards operate under the Department of Revenue, Ministry of Finance, but their tax domains are different.
Why the other options are wrong
- (B) The Reserve Bank of India is not the tax administration authority for direct taxes; the cited RBI circular itself identifies CBDT as responsible for administering them.
- (C) CBIC administers indirect taxes such as GST and Customs, whereas the question asks about direct taxes such as Income Tax and Corporate Tax.
- (D) NITI Aayog does not administer taxes; direct tax administration is assigned to CBDT.
Concept
This tests the institutional split in Indian public finance between direct and indirect tax administration. It recurs in RAS because questions on fiscal policy often require matching taxes with the correct statutory or administrative body.