Income Tax dept, GSTN to share tax payer data to scale up scrutiny

The government on Tuesday authorized the income tax department to share details including sales and profits that businesses have reported in their income tax returns with GSTN, the company that processes Goods and Services Tax (GST) returns, to scale up scrutiny and check tax evasion.

The move will allow direct and indirect tax authorities to zero in on discrepancies in the information that business have disclosed in their respective tax return forms and nail tax evaders. The move comes as part of tightening of anti-evasion measures after the GST Council gave several relaxations in recent months to ease the rigors of tax compliance to businesses, especially to small ones. A formal system of data sharing between direct and indirect tax authorities means businesses have to be extra careful while filling up their tax returns and avoid mismatches. The move is significant considering that businesses did not show enthusiasm in opting for a single window tax facility for corporate tax, service tax and central excise in 2006 under the name Large Taxpayer Unit as they apparently preferred to avoid simultaneous scrutiny by different tax authorities.

An office order issued by the Central Board of Direct Taxes (CBDT) on Tuesday authorized the Principal Director General of Income Tax (systems) or Director General of Income Tax (systems) to share specified data with an officer of GSTN. The designated officers from both sides will also decide ways of simultaneous exchange of information. Mint has seen a copy of the order.

“Businesses would need to be very cognizant of the fact that data submitted by them will be compared across portals,” said M.S. Mani, partner at Deloitte India.

Data sharing between direct and indirect tax authorities is indicative of the government’s intention not to spare taxpayers from escaping tax payable under any of the laws, said Rakesh Nangia, managing partner, Nangia Advisors (Andersen Global). “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 under-reporting or non-reporting of income, if any,” said Nangia. Central and state authorities collected ₹1 trillion in GST in March, compared to ₹97,247 in February.