Data Sharing between Income Tax and GST Departments on an Automatic and Regular Basis would Generate More Revenue: Economic Survey Report 2023 [Read Report]

As per the Report of the Economic Survey, 2023, the data sharing between Income tax and GST departments on an automatic and regular basis would generate more revenue.

Building trust between the government and the citizens/businesses unleashes efficiency gains through improved investor sentiment, better ease of doing business, and more effective governance.

A trust-based approach towards compliance builds entrepreneurs’ faith in corporate institutions and motivates them to adopt fairer and more transparent business practices. After the reform, more than 1400 default cases have been decided without resorting to the court. Also, more than 4,00,000 companies have willingly rectified past defaults to avoid penalties under the Companies Act.

The introduction of technology-backed tax governance reforms for simplifying tax processes, enhancing compliance, and improving fraud detection systems. The faceless assessment and appeal systems no longer require a physical interface between taxpayers and the Income Tax department.

Multiple consistency checks possible with integrated digital systems reduce tax evasion. The GST return filing mechanism results in better income reporting, leading to higher direct tax collections. The decision to share data and information between CBDT and CBIC on an automatic and regular basis is a promising reform, and it would result in efficiency gains in the tax system. These reforms augur well for future economic growth and future resource mobilisation.

Further, a new provision to affect business reorganization had been made under the Income Tax Act, of 1961, requiring the successor entity to file a modified return within six months of the order of the reorganization being passed by the Competent Authority.

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