With the tax department in a MoU-signing spree for data sharing with various regulators and ministries, there is now increasing fear among taxpayers that this data will be used as tool for harassment by the tax department. Many feel that such information was already shared with tax departments as and when required but it is for the first time the tax department is signing MoUs with various regulators and government agencies.
Within last two weeks, the Central Board of Direct Taxes (CBDT) has signed MoU for data sharing with the Securities and Exchange Board of India (SEBI), MSME Ministry and now Central Board of Indirect Taxes and Customs (CBIC). However, tax department sources refute these fears saying that the signing of MoU only formalises the data sharing process.
According to the tax department, the Memorandum of Understandings (MoUs) will facilitate the sharing of data and information between the tax department and these entities on an automatic and regular basis. It says that in addition to regular exchange of data, these entities could also exchange with each other, on request and suo moto basis, any information available in their respective databases, for the purpose of carrying out their functions under various laws.
On the concerns of using such information to harass tax payers, a tax department source told Business Today: "That is not at all the case. This is an enabling procedure for the taxpayer. For example, if they are registering on the MSME site, then they will not have to fill every single detail as the ministry will directly fetch the data from income tax department. So, this is kind of ease of compliance as you are reducing the procedures that are mandated for these organisations."
The tax department official further said that it's a two-way exchange of information and not just a case of only tax department receiving information on taxpayers. The Income Tax department already receives information on large transactions from banks, mutual funds, etc., and has no such MoUs with them. The tax official told Business Today that banks are already covered under legal framework and are sending information under Section 285BA for many years - so there is no need to sign MoU with banks, etc.
The official further said: "This is a big change as there will be more transparency. We are sort of enabling the taxpayers to see what transactions they did. We are getting the data and we are making the data available to them like we do in the case of individuals by making the data available in 26AS." The official cited the example of PAN and Aadhar linking to say that how such information sharing is helping reduce procedural formalities. "If you apply for PAN, the data will be fetched from your Aadhar and the e-PAN is generated within 10 minutes," she says.