New Delhi, July 20: The income tax department will soon start sharing data related to depreciation, sales and gross turnover of micro-small and medium enterprises with the MSME Ministry.
The Central Board of Direct Taxes (CBDT) has directed the principal director general of Income Tax (Systems) to share information with the MSME Ministry.
"To facilitate the process of furnishing information, the principal director general of Income-tax (Systems) would enter into a memorandum of understanding ('MoU') with the notified authority of the ministry of MSME, Government of India, which inter-alia would include the mode of transfer of data. Maintenance of confidentiality, mechanism for safe preservation of data, weeding out after usage etc," the CBDT order dated July 14, said.
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Section 138 of the Income Tax Act empowers income tax authorities to share information or details of its taxpayers with other government agencies, as may be notified.
The timeline for furnishing information will also be decided by the principal director general of the Income-tax (Systems) in consultation with the concerned ministry and included in the said MoU, the order added.
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According to Shailesh Kumar, partner, Nangia & Co LLP, last month the government notified new criteria for qualifying as MSME, based on investment in plant, machinery and turnover.
"Vide present order read with Notification no 48 of 2020 issued by the CBDT, nodal authorities are appointed in both Ministry of MSME as well as in Income Tax department, so that information required by Ministry of MSME regarding investment or turnover of an entity for declaring it as qualifying MSME can be obtained directly from Income tax department," he said.
This exchange of information will ensure that only those entities will qualify as MSME under new rules, which have prescribed investment in plant and machinery and turnover as reported in their ITR, Kumar added.
After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Aatmanirbhar Bharat package on May 13.
As per the revised definition, an enterprise is micro where the investment in plant and machinery or equipment does not exceed Rs 1 crore and turnover does not cross Rs 5 crore.
A small enterprise is the one where the investment in plant and machinery or equipment does not exceed Rs 10 crore and turnover is not over Rs 50 crore.
For medium enterprise, as per the new classification, the investment in plant and machinery or equipment should not exceed Rs 50 crore and turnover should be below Rs 250 crore.
