Tax dept to share ITR data with GSTN to detect tax evasion by business persons
May, 01st 2019
Soon, the income tax department will be sharing the tax return data of business persons with the Goods and Services Tax Network (GSTN) officer. The move is aimed at spotting income anomalies or mismatches between their GST returns and income tax return (ITR).
Clearly, business persons need to ensure that their income tax returns and GST returns correlate. In simple terms, a business person whose income as per ITR is sharply at variance with what is declared in his/her GST returns would come under the lens.
Before GST was introduced, the department could not reconcile the data filed by the business persons in his/her sales tax return/service tax return and ITR. This was because sales tax return was filed at the various state levels and service tax return was filed at the national level. However, post the introduction of GST, such data will now be available at the central level which makes exchange of data between the two authorities easy.
This move will apply for all those assessees who have business income and file the returns specified for those with this income i.e. ITR 3 to ITR -7.
As per the order issued by the Central Board of Direct Taxes (CBDT) dated April 30, 2019, important financial fields such as - 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 concerned authorities themselves will be shared by the income tax department with the GSTN officers.
Archit Gupta, CEO & founder, Cleartax.com 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."
As per the order, the exchange of data will be request-based as well as spontaneous and automatic. However, before sharing any information, the income tax authority shall determine that such information is necessary for the GSTN authority to perform its functions, says the order.
Chartered Accountant, Naveen Wadhwa, DGM, taxmann.com 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."
As per the order, for the exchange of information to take place, a Memorandum of Understanding (MoU) will be signed between Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) and nodal officer, GSTN.