Sharing Information Between Tax Authorities

KOSH MULO DAND’ this motto of the Income Tax Department (IT Department) literally means “The treasure is more important than the army” and its implied meaning is “Revenue is the back bone of the country.” Indeed rightly said. Revenue is one of the crucial parts of governing a country and in our country taxes whether direct or indirect are an integral part of “Kosh”.

Over the period of time, it has been noticed that payment of taxes has reduced mainly due to tax evasion and undisclosed sales. Accordingly, in order to reduce tax evasion and increase reporting of turnover, the two tax authorities of India i.e. the Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and Customs (CBIC) have signed a Memorandum of Understanding (MOU) for exchange of information between two taxing authorities.

This MOU has resulted in income tax website now showing GST data of a taxpayer. As discussed above, the sharing of information was to avoid tax evasion and increase reporting of turnover. This sharing of information includes tracing non-filers under the Income Tax Act, 1961 and the Goods and Services Act, 2017. This shall help both the authorities to match revenue reported by taxpayer under Income Tax and GST. Any mismatch in data will be auto-populated or reflected in the E-Campaign tab of Compliance Portal

on the website of the IT Department. The step by step guide for viewing the GST data on IT website is discussed below:

Step1- Go to https://www.incometaxindiaefiling.gov.in/home and login to the portal using e-filing User ID and password

Step 2 - Now under Compliance tab, Select “Compliance portal” option and click on Confirm button

Step 3 - Now Go to E- Campaign tab a notification will come under Non- filing of return

Step 4 - Now, click on the Notification, you will see the details for which non filing notice has been received. If you further click on the Business transaction details it will show the list of purchases made during the year as below. This data is from the GSTR 2A of a taxpayer

As of now only details of expenses and purchases as reported in GST are being shared. Going forward details of turnover HSN wise, place of business as reported in GST will also be shared and details as per E-way bill may also be shared. This will help not only taxpayers but also to their tax advisors in reconciling turnover reported under two different platforms and also ensure timely compliance of reporting of the same.

It may be noted that the decision regarding type of information to be shared to the tax payer under his income tax account over the IT website shall be discretionary. Many details and information shared by GST to IT may not be reflected in a taxpayer’s IT account. Instead that information shall be used by the investigation wing of IT department as reasons to believe for initiating any assessment proceedings including raids against the taxpayer. This sharing of information will be a tool for taxing authorities to keep an eye over the business of a taxpayer.

A business income can be under-reported by either increasing bogus purchases or expenses or by not reporting the turnover. Details of major purchases and expenses on GST portal cannot be manipulated by the tax payer as that data is uploaded by the supplier and tax payer has no control over the same. Also, turnover cannot be under-reported in case of B2B cases over GST portal as the person to whom the sales have been made would want to avail the Input Tax Credit. Any practise of not reporting the sales invoice would then affect business-customer relationship. Accordingly, under reporting of turnover under GST is extremely difficult.

Thus, it is high time for taxpayers to compare and report the turnover especially in case of business organizations as taxing authorities have become robust along with advance as never before. Also, the Chartered Accountant has to be very careful while conducting GST audits along with IT audits and verify compliances and data under both the laws.

Authors:

Gyanesh Shukla, Director

Chetan Mody, Consultant

Email id: info@masd.co.in