Black Money Current Affairs

Ministry of Corporate Affairs, CBDT ink MoU for Automatic and Regular Exchange of Information

The Ministry of Corporate Affairs (MCA) and Central Board of Direct Taxes (CBDT) have signed Memorandum of Understanding (MoU) for automatic and regular exchange of tax information.

The purpose of the MoU is to curb the menace of shell companies, money laundering and black money in the country and prevent misuse of corporate structure by shell companies for various illegal purposes,

Key Facts

The MoU will facilitate sharing of data and information between MCA and CBDT on automatic and regular basis. It will enable sharing of specific information such as Permanent Account Number (PAN) data of corporates, financial statements filed with Registrar by corporates, Income Tax returns (ITRs) of corporates, returns of share allotments, audit reports and statements of financial transactions (SFT) received from banks relating to corporates.

The MoU will ensure that both MCA and CBDT have seamless PAN-DIN (Director Identity Number) and PAN-CIN (Corporate Identity Number) linkage for regulatory purposes. The information shared will pertain to both Indian corporates as well as foreign corporates operating in India.

In addition to regular exchange of data, CBDT and MCA will also exchange with any information available in their respective databases with each other, on request, for purpose of carrying out scrutiny, inspection, investigation and prosecution.

Under the MoU, Data Exchange Steering Group also has been constituted for initiative, which will meet periodically to review data exchange status and take steps to further improve effectiveness of CBDT and MCA.

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Government to launch Project Insight

The Union Finance Ministry is planning to launch ‘Project Insight’ from October 2017 to monitor high value transactions and detect tax evaders using technology with a view to curbing circulation of black money.

To implement the project government has signed contract with Information Technogolgy major L&T Infotect Ltd.  The project will add to list of efforts made by government to curb black money like Operation Clean Money’ after demonetisation, Income Disclosure Scheme, GST implementation, amendment DTAA with other countries etc.

Project Insight

It will use data mining, big data analytics to scoop out tax evaders from social media platforms to deduce mismatches between spending pattern and income declaration. The linking of PAN (Permanent Account Number) with Aadhaar will be key identifier to be used by IT Department to link and analyse various transactions relating to tax payers.

The integrated information technology platform will help in catching tax evaders in non-intrusive manner using technology and without traditional intrusive methods like search and seizure. It will use technology to allow government collate databases of IT forms, IT returns, TDS/TCS statements and Statement of Financial Transactions received from financial institutions.

Its reporting compliance management system will ensure that third party reporting entities like banks and other financial institutions is timely and accurate. It will also set up streamlined data exchange mechanism for other government departments.

It will also be leveraged for implementation of Foreign Account Tax Compliance Act Inter Governmental Agreement (FATCA IGA) and Common Reporting Standard (CRS). IT Department is going to set up new Compliance Management Centralised Processing Centre (CMCPC) for handling preliminary verification, campaign management, generation of bulk letters/notices and follow-up.

Benefits

Project Insights will play key role in widening of tax base and data mining to track tax evaders. It will help in catching tax evaders in non-intrusive manner like search and seizure. It will help to promote voluntary compliance and also enable taxpayers to resolve simple compliance related issues in online manner without visiting Income tax office.

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