Indian government’s major initiative to unearth the undeclared tax or illegal wealth – Project insight! The project forms its base over technologically driven concepts and ideas in line with spread of digitalization widely in corners of the economy. With the Project Insight, the Income-tax Department aims to promote voluntary compliance and deter non-compliance; to impart confidence that all eligible persons pay appropriate tax; and to promote fair and judicious tax administration.
As a part of the project, data mining and big data analytics will be used to excavate tax evaders by accessing the information on their Facebook and Instagram accounts for devising the mismatches between spending pattern and income declaration. The information regarding international trips; new cars; houses; and check-in used by taxpayers to flaunt socially, may now be used by the income-tax department to ascertain the status of a person vis-à-vis the income reported in the income-tax return.
It will further enable the income-tax department to collate databases received through different filings/ reporting made with the Income-tax department in income-tax returns, withholding tax returns and statement of financial transactions and build a profile of any person. A verification can also be conducted through portal on the cases generated based on profiles of Individuals. This integrated information technology is one step ahead of the methods currently being adopted to catch the tax evaders. This new non-intrusive tool using technology would be used to identify tax evaders without resorting to traditional intrusive methods like search and seizure.
The project would incorporate the reporting requirement for which a reporting portal has been launched. Its reporting compliance management system will ensure that compliance by third party entities like banks and other financial institutions is timely and accurate. The Income-tax department is leaving no stone unturned to create a tax healthy environment in country.
From top to bottom, functionalities have been developed to create a holistic profile those who are tax compliant as well as those who are non-compliant. A 360-degree view would enhance the income-tax department’s ability to monitor the flow of funds and will provide an audit trail of high value transactions and curb circulation of black money. It would not only identify the tax evaders but would check the accountability and authenticity of the existing taxpayers.
The portal will contain exhaustive information with an integrated system for managing such information in an effective manner. It will not only contain the master file and details of movable and immovable property of the taxpayer, but also an intelligent hub, which will provide filtered information to identify non-compliant taxpayers. It will also provide revenue related details such as gross and net collection, refund, top taxpayers and tax base.
With 360-degree profiling, income tax department would be able to access tax collection, tax base, taxpayers’ compliance, TDS & third party reporting. The wholesome details such as master profile, asset details, ITR status, social networking and relationship would also help to create a geographic information system which would identify the specific jurisdiction requiring focus. The project is aimed at providing innumerable benefits to the income-tax department. It would not only promote voluntary compliance but also identify the high risk tax evaders. Information regarding the cases related to demonetization cases and high demand cases exceeding Rs 10 lakh, where demand has been marked non-recoverable shall also form part of the portal to assist tax officers.
The system is a transformative step, which will change the way the income-tax department works. However, an issue can be raised on right to privacy with the access to the information on social media account. If proved successful, it would fulfill different objectives of the department ranging from smooth tax administration, increasing the number of tax compliant, enhancing the tax base, ensure accountability.
Contributing Advisors
Myles CulmerDirector, BDO Advisory Services