CBDT permits sharing data on taxpayers with GSTN

The income tax department has been authorized by the government to share the details of sales and profits that business professionals have reported in the GST returns. This will help the authorities keep a better eye on tax evasion through tight scrutiny.

As a result of this move, the direct and indirect tax authorities will be able to locate cases of tax evasion. Business houses that have disclosed different set of data in the two forms of tax returns will come under scrutiny now. This is a part of anti-evasion measures being developed by the government. The move comes after several relaxations have been made by the GST Council in recent months, that are expected to simplify the troubles of tax compliance to business, particularly the small ones.

This decision of the government comes as a measure to develop anti-evasion mechanism. With this decision, a formal infrastructure for sharing data between the direct and indirect tax authorities for business will be established. Therefore, business houses need to be extra careful when they file their tax returns. Going forward, they should make sure that no data mismatches take place. It should be noted that the business houses did not show much enthusiasm in choosing a single window tax facility for service tax, corporate tax and central excise back in 2006, under the ‘Large Taxpayer Unit’. The reason was that they preferred avoiding simultaneous scrutiny that would be made by various tax authorities.

The CBDT (Central Board of Direct Taxes) has issued an office order, through which the Director General of Income Tax (systems) or Principal Director General of Income Tax (systems) have been authorized to share particular data with GSTN officers. The designated officers from these two sides will also be deciding the ways through which simultaneous information exchange can take place.

The business houses need to be aware that the data they furnish will be tallied on both these platforms. Therefore, it would be unwise to manipulate the information they provide to the tax authorities from now on. When the new mechanism comes into play, the government will be having more data at their disposal. They can validate the disclosed amount of tax returns by the business firms with a greater accuracy and transparency. In case the business firms under-report, they may be detected. It should be noted that last Match, the state and central authorities collected GST of around INR 1 trillion. In February, the amount was around INR 97, 247. Evidently, the tax collecting mechanism is becoming more powerful. With the new move being made by the government, it will become easier to detect tax evasion. Evidently, it appears to be a good decision made by the government. The strategy can make the taxation system more organized.