13/09/2021
Income Tax portal 2.0 to integrate with bourses to track trade transactions
Will take stock of discrepancies in assessee disclosures in ITR
Topics
Income tax | Income Tax department | tax filing
Shrimi Choudhary | New Delhi Last Updated at September 8, 2021 06:01 IST
The income-tax (I-T) department is working on integrating the new e-filing portal with stock exchanges to help tax authorities track trade transactions, including futures and options.
The integrated system will look at discrepancies between the data disclosed by an assessee and match it with data fetched from stock exchanges, using artificial intelligence, said two officials in the know.
This will help detect and red-flag such matters, particularly those related to non-filers of income-tax return (ITR). The department aims to achieve this integration this fiscal year.
This comes at a time when there are concerns over growing retail participation in the equity markets. The share of individual retail investors in the National Stock Exchange’s cash market turnover has shot up from 39 per cent in 2019-20 to 45 per cent in 2020-21.
After integration, the portal will automatically compare the turnover on exchanges, based on the permanent account number, with the reported figures in the respective ITRs. Accordingly, tax authorities will process the data and take up those matters for further scrutiny.
Eventually, the portal will integrate the database from depositories, clearing corporations, and registrars with issue-and-share transfer agents and other intermediaries.
“The automatic exchange of information or real-time exchanges or even full integration of database has been under discussion. Such an integration will help the department match data on a real-time basis, rather than wait for exchanges and other participants to file a statement of financial transactions (SFT)," said one of the two officials quoted earlier.
SFT is a reporting mechanism, wherein specified entities are required to provide information of material financial transactions to the tax department.
HOW THE SYSTEM WILL WORK
• Stock exchanges keep trade transaction data of each investor
• The new portal will get access to trade data PAN-wise
• Exchanges' database will get integrated into I-T portal
• I-T system will run risk-assessment protocol on the data using artificial intelligence
• The system will detect discrepancies and raise a red flag 🚩
Earlier, tax authorities used to seek information from the Securities and Exchange Board of India (Sebi) on select cases. In the case of individuals, only suspicious transactions used to be taken up. Since the portal will have access to all kinds of data on market entities, taxmen will verify if gains were understated.
The I-T department had earlier this year notified market intermediaries, including exchanges, to submit information on capital gains made on listed securities and mutual funds.
It requires companies to provide details of dividends paid, while banks, post offices, and non-banking financial companies must submit information on interest earned.
This was following an announcement in the February 1 Union Budget which had said that to further ease the filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc would also be pre-filled in tax forms for taxpayers.
Last year, the I-T department had signed a data-sharing agreement with Sebi to access details of transactions by traders, particularly those red-flagged by the regulator.
The new portal, however, has been grappling with technical blips since its launch.
After being summoned by the finance ministry for consistent glitches on the issue last month, Infosys' top management, including Chief Executive Officer Salil Parekh and Chief Operating officer Pravin Rao, has been given the September 15 deadline to resolve the concerns.
