CBDT and SEBI sign MoU for data exchange

The share trading and other data will now be with Income Tax Department

• A formal Memorandum of Understanding (MoU) has been signed between the
  CBDT and SEBI, via video conference, for exchange of data between the two
  organizations
• The move is aimed at enhancing the tax department’s scrutiny of stock market
  transactions that are aimed at evading taxes
• The MoU will ensure that both CBDT and SEBI have seamless linkage for data
  exchange for the financial regulation purposes

Salient highlights of the MoU

• The MoU will facilitate the sharing of data and information between SEBI and
  CBDT on an automatic and regular basis
• In addition to regular exchange of data, SEBI and CBDT will 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
• The MoU comes into force from the date it was signed and is an ongoing
  initiative of CBDT and SEBI, who are already collaborating through various
  existing mechanisms
• A Data Exchange Steering Group has also been constituted for the initiative,
  which will meet periodically to review the data exchange status and take steps
  to further improve the effectiveness of the data sharing mechanism
• The MoU marks the beginning of a new era of cooperation and synergy between
  SEBI and CBDT

Background for the MoU between CBDT and SEBI

• Many retail investors trade in equities on a regular basis, resulting in small
  capital gains or losses
• But many of them used to casually ignore mentioning the details in their
  Income Tax Return (ITR)
• Due to unavailability of data on capital gains, the Income Tax Department was
  also not in a position to detect the non-disclosure
• However, things are now going to change as a formal Memorandum of
  Understanding (MoU) was signed today between the Central Board of Direct
  Taxes (CBDT) and market regulator Securities and Exchange Board of India
  (SEBI)
• In fact, to make disclosure of information on equity and equity related
  transactions stringent, the Income Tax (I-T) Department had added a new sheet
  in relevant ITR Forms last year – named Schedule 112 A
• The MoU marks the beginning of a new era of cooperation and synergy between
  SEBI and CBDT
• A Data Exchange Steering Group has been constituted for the data exchange
  initiative, which will meet periodically to review the data exchange status and
  improve effectiveness of data sharing mechanism

What is CBDT?

• The Central Board of Direct Taxes is a statutory authority functioning under
  the Central Board of Revenue Act, 1963
• The officials of the Board in their ex-officio capacity also function as a Division
  of the Ministry dealing with matters relating to levy and collection of direct
  taxes
• The Central Board of Revenue as the apex body of the Department, charged
  with the administration of taxes, came into existence as a result of the Central
  Board of Revenue Act, 1924
• Initially the Board was in charge of both direct and indirect taxes
• However, when the administration of taxes became too unwieldy for one Board
  to handle, the Board was split up into two, namely the Central Board of Direct
  Taxes and Central Board of Excise and Customs with effect from 1.1.1964
• This bifurcation was brought about by constitution of two Boards u/s 3 of the
  Central Board of Revenue Act, 1963

Pic courtesy : affairscloud.com