Cross-linking Income Tax Act and GST

Model GST Law, specifically Section 25 speaks about the furnishing details with respect to outward supplies. Further, Section 26 speaks about furnishing of details with respect to Inward supplies.

In the GST Regime, supply comprises of both goods & services. Supplies that are taxable or exempted or zero rated are also required to be reported. Final changes to all of these details could be made only in the Annual Return which is required to be furnished by September annually. It also directs that you are required for reconciling the figures that is reported in the periodical returns with what is reported in the Annual Return.

Goods and Services Tax
Goods and Services Tax and its reconciliation with data shared with Income Tax Department

All the details are required to be submitted online via portal as per the periodicity in filing the return for any taxable Person.

These details would then be cross matched & cross checked and after the removal of possible irregularities in that, a final return is required to be filed electronically by taxable person via GST Portal.

If you go through the format of the return, it is obvious that thorough details are required to be filled in the return. These would include along with details of taxable supplies, details related to exempted and zero rated supplies are also required to be furnished in the report.

Section 285BA of the Income Tax Act, has a specific provision which allows the Income Tax Department access to the information that is on record with several Government Departments. In model GST law there is a parallel provision integrated in the form of Section 127 that allows cross-sharing information among several Government Departments and Government Authorities.

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There is a possible scenario in which the ITO or ITO TDS could have all details provided by Taxable Persons under the Goods & Services Tax Laws & could cross check with the information as provided by the Assessee with the returns as furnished under the Income Tax Laws.

It is also worth to note that the provisions of the newly introduced section 270A related to misreporting and under-reporting.

The likely consequences demand a taxpayer now need to work in a disciplined manner for complying with these laws and also requires taking care of being on the legal and correct side of the law.