Indian rupee banknotes of various denominations sit in a cash register. (Photographer: Dhiraj Singh/Bloomberg)

Income Tax Department To Soon Share Turnover, Returns Data Of Business With GSTN

The Income Tax Department will share data with the Goods and Service Tax Network 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 GST, will also decide on the modalities for "automatic" and "spontaneous" exchange of data besides the "request-based" data exchange.

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

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.

"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 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 vis--vis annual GST returns.

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

Also read: Taxpayers Can Compare GST In Final, Summary Return Forms, Says GSTN

Nangia Advisors (Andersen Global) Managing Partner Rakesh Nangia said facilitation of exchange of data between authorities under income tax 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 I-T Act and GST Act and prevent the generation of black money.

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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