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Tax Alert: CBDT signs MoU for data exchange

30 July 2020

CBDT signs MoU for data exchange with different Indian Government agencies

Section 138 of the Income-tax Act, 1961 (IT Act) empowers revenue authorities to share any information/details available with them concerning taxpayers with other government agencies, as may be notified. In this regard, recently, the Central Board of Direct Taxes (CBDT) has issued press releases intimating that it has signed a Memorandum of Understanding (MoU) for data exchange with the following Government agencies:

  • Central Board of Indirect Taxes and Customs (CBIC) [1];
  • Ministry of Micro, Small and Medium Enterprises (MoMSME) [2]
  • Securities Exchange Board of India (SEBI) [3];  

We, at BDO in India, have summarised these press releases hereunder:

  • ­MoU between CBDT and CBIC
    • The MoU shall come into force from date of signing and shall supersede the earlier MoU signed between the CBDT and erstwhile Central Board of Excise and Customs (CBEC) in the year 2015
    • The MoU is to facilitate sharing of data and information between CBDT and CBIC on an automatic and regular basis. Further, it will also enable both the agencies to exchange on request and spontaneous basis, any useful information available in their respective databases
    • A Data Exchange Steering Group has been constituted to periodically review the data exchange status and take further steps to improve the effectiveness of the data sharing mechanism
  • MoU between CBDT and SEBI
    • This MoU is similar to the one signed between CBDT and CBIC and shall come into force from the date of signing
    • In addition to regular exchange of data, CBDT and SEBI will also exchange with each other, on request and on suo moto basis, any information available in their respective databases, for the purpose of carrying out scrutiny, inspection, investigation and prosecution
  • MoU between CBDT and MoMSME
    • The MoU shall come into force from the date of signing
    • The MoU will facilitate seamless sharing of certain income-tax return related information by the revenue department to MoMSME, which in turn, will enable MoMSME to check and classify enterprises in Micro, Small and Medium categories, as per the criteria notified[4] by MoMSME.

BDO Comments

The MoUs will enable the CBDT, SEBI and CBIC to collectively use their resources and will mark the beginning of a new era of cooperation and synergy amongst them.

Any mismatch in data submitted or any erroneous/inconsistent claims made for deductions/benefits to any of these agencies may lead to enquiries and litigations. The MOU between CBDT and MoMSME is aimed at ensuring that the benefits can be availed only by those companies that are within the ambit of MSMEs.

[1] CBDT Press Release dated 21 July 2020

[2] CBDT Press Release dated 20 July 2020

[3] CBDT Press Release dated 8 July 2020

[4] Notification No. S.O. 2119(E) of MoMSME, dated 26 June 2020