Tax dept to share Income Tax Return data with GSTN to detect tax evasion

The income tax department will share data with GST Network (GSTN) on important financial parameters such as status of I-T returns filing, turnover and income of businesses, as the authorities seek to plug loopholes and nab tax evaders.

Income tax officers and GSTN, the company that handles the information technology backbone of the new indirect tax regime, will also decide on the modalities for “automatic” and “spontaneous” exchange of data besides the “request-based” data exchange.

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The principal director general of I-T (systems) or director general of I-T (systems) would enter into a memorandum of understanding (MoU) with GSTN to facilitate the process of furnishing information, according to an order by the Central Board of Direct Taxes (CBDT).

The MoU would include modalities of exchange of data, maintenance of confidentiality, and mechanism for safe preservation of data.

The timeline for furnishing information shall also be decided by the principal director general of I-T (systems) or director general of I-T (systems) in consultation with GSTN and would be included in the MoU.

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“While furnishing the information, the specified income tax authority shall form an opinion that sharing of such information is necessary for the purposes of enabling the specified authority in GSTN to perform its functions under the goods and services tax (GST),” the CBDT said.

Exchange of data between I-T and GST authorities would mean that the tax authorities will now reconcile the data sets reported by businesses in income tax returns (ITRs) vis- -vis annual GST returns.

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According to the CBDT, the important financial fields on which request-based data exchange will take place include the status of filing of ITR, turnover, gross total income, turnover ratio, GTI (gross total income) range, turnover range and any other field which will be decided by the authorities concerned.

Rolled out from July 1, 2017, GST has ensured centralised return filing system where businesses have to report their sales along with input tax credit details.

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Nangia Advisors (Andersen Global) Managing Partner Rakesh Nangia said facilitation of exchange of data between authorities under income tax (I-T) and GST is indicative of the government’s intention not to spare taxpayers from escaping tax payable under any of the laws.

“With more information in hand, the government would be able to validate amount of income disclosed both under the income tax and GST which would enable the authorities to identify any under-reporting or non-reporting of income, if any,” Nangia said.

He also said such exchange of data would enable the tax officers to implement the desired intent of both the I-T Act and GST Act and prevent the generation of black money.

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Ashok Maheshwary & Associates LLP Partner Amit Maheshwari said this will help the tax authorities to act based on intelligence shared between the revenue authorities concerned.

“The sharing of information would be based on specific requests as well as automatic and would cover several key parameters. An important safeguard is that the income tax authority has to form an opinion that sharing of information is necessary,” he said.

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Archit Gupta, CEO & founder, says, “Government’s tax departments can now act in unison and review taxpayers and their submissions via information collected between them separately. Starting last year’s ITRs the government had begun collecting information in ITRs related to GST. With this request-based and automated sharing of data – government can do intensive analysis to pick up cases for further scrutiny. Turnover may not be a one-on-one match between the two direct tax returns and GST returns, however several trends and compliance may be analysed in detail.”

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Chartered Accountant, Naveen Wadhwa, DGM, says, “In earlier years, mismatch in the figures of turnovers furnished by SMEs in Income-tax returns and Sales returns were very common. Signing of an MOU between the I-T Dept. and GSTN will ensure that the taxpayers furnish same set of information in income-tax return and GST return. As more than 38% Income-tax returns filled for the FY 2017-18 include business income, such initiatives to reconcile the turnover of business would help the government to check the tax evasion.”

Source: Business Today and Economic Times.

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