Today, the word “Budget” is closely associated with government spending, taxation, and economic growth. However, very few people know that India’s first budget was presented long before independence, and the tax system at that time was very different from what we see today.
Let’s explore the history behind India’s first budget and how income tax was introduced.
Who Presented India’s First Budget?
India’s first-ever budget was presented in the year 1860, nearly 90 years before independence. It was introduced by James Wilson, a British economist and politician.
James Wilson was appointed to manage India’s finances during British rule, especially after the financial crisis that followed the Revolt of 1857. His budget laid the foundation for India’s modern financial system.
Introduction of Income Tax and Tax Exemption
The income tax system in India began in 1860 with this historic budget. One of the most notable features was the tax exemption rule.
People earning less than ₹200 annually were completely exempt from income tax. This exemption was introduced to protect the lower-income population from financial burden. Those earning above this threshold were required to pay tax at fixed rates.
At that time, ₹200 was considered a significant amount, and this system marked the beginning of structured taxation in India.
Purpose of the First Budget
The primary objective of the first budget was to generate revenue for the British administration and recover losses caused by the 1857 uprising. It also aimed to create a stable financial framework for governance.
The introduction of income tax played a crucial role in shaping India’s future taxation policies.
Budget After Independence
After independence, India’s first budget as a free nation was presented on 26 November 1947 by the country’s first Finance Minister, R. K. Shanmukham Chetty.
Since then, the Union Budget has been presented annually, reflecting India’s economic priorities and growth strategies.
India’s budget history dates back to 1860, when James Wilson presented the first budget under British rule. The introduction of income tax and the exemption for those earning less than ₹200 annually marked a significant step toward a structured financial system.
Over the years, India’s budget and tax policies have evolved dramatically, shaping the nation’s economic journey