In an effort to curb tax evasion, the Central Board of Direct Taxes (CBDT) on Tuesday notified the authority for furnishing information to the Goods and Services Tax Network (GSTN). The designated authority would be the Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems).

The IT authority will enter into a Memorandum of Understanding (MoU) with the GSTN. The MoU will cover aspects like modalities of exchange of data, confidentiality, mechanism for safe preservation, etc. Data/information will include request-based exchange of data wherein important financial fields captured in return of income like turnover/gross total income, status of filing ITR, turnover ratio, GTI range, turnover range etc., spontaneous exchange of data and automatic exchange of data.

The MoU will help in fulfilling Section 138(1)(a) of the Income-tax Act, 1961 which provides that the tax authority may furnish information to any officer, authority or body performing any functions under any law relating to the imposition of any tax, duty or cess, any such information received or obtained by any income-tax authority in the performance of his functions under this Act. The section provides an option to board for furnishing such information through a specified income tax authority. However, such information in the opinion of the Board or specified income-tax authority should be necessary for enabling the other officer, authority or body to perform his or its functions under that law.

Rakesh Nangia, Managing Partner at Nangia Advisors (Andersen Global), said that 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 will 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 / non-reporting of income, if any,” he said.

Though the order provides extensive powers to specified authority for providing information, it has to follow a well-defined protocol to ensure fair practices. Such exchange of data will enable tax officers to implement the desired intent of both the laws and prevent generation of black money.