IT Dept goes data hunting for tax defaulters; many cos, individuals get notices

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The Income Tax (IT) Department has taken up data analysis to identify tax defaulters with a renewed data sharing agreement between CBDT and CBIC.

The Central Board of Direct Taxes (CBDT), the authority for direct taxes, and the Central Board of Indirect Taxes and Customs (CBIC), the authority for indirect taxes, renewed their agreement which was first signed in 2015.

Tax notices are being sent to companies and individuals based on income and service tax returns. For example, from 2014-15 onwards, if an employee or company paid too much income tax but no service tax then authorities are questioning how a business earning substantial revenue didn’t pay enough service tax.

CBDT and other indirect tax authorities issued tax notices on the basis of the data revealed through the process. Businesses were asked to pay 15% service tax on earned revenue. For example, as per a report in ET, a tax notice questioned how a company paid lakhs of rupees in income tax but zero in service tax for 2014-15.

IT authorities used data analytics to find individuals who claimed to earn money from companies or by providing services were checked against service tax data. The IT department seems to be focused on the informal sector, as notices have been issued to astrologers as well.

The CBDT-CBIC agreement for data sharing was renewed in July this year. The MoU signed between the two authorities was aimed at facilitating the sharing of data and information between them on an automatic and regular basis.

“In addition to regular exchange of data, CBDT and CBIC will also exchange with each other, on request and spontaneous basis, any information available in their respective databases which may have utility for the other organisation,” said the statement of the agreement.

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