I-T department to use technology tools to nab tax evaders

BI, trend analysis tools built on top of data will make department more 'proactive than reactive' in nabbing tax dodgers

  

In order to tighten the noose around tax evaders and expand the tax net, the ministry of finance is in the process of rolling out seven to eight big-ticket technology projects which will significantly bolster its tech capability.

The projects, which are at various stages of implementation, will arm the Income Tax department to do an almost 360 degree profiling of the tax payers. The new tech capability will ensure seamless movement of the information within the department which is currently lying in various silos.

And the business intelligence (BI) and trend analysis tools built on top of the data will make the department more “proactive than reactive” in nabbing tax dodgers. Moreover, the department is also mulling to collect transaction data from external sources such as the Internet.

“The country’s tax base in not going up. If you look at our tax to gross domestic product ratio, it is the lowest in the world,” said a senior official with a technology firm which is working with the government on some of these projects. “We as a country specialize in how to evade taxes. That's the reason why the government is looking using technology tools to check tax evasion in the country.”

Take for example the case of the Rs.200 crore Income tax business applications project. It aims at refreshing and significantly upgrading all existing technologies of the department. The department is also implementing a network project which will provide better connectivity across Income tax offices with higher speed bandwidth.

A senior income tax official said that currently data does not move seamlessly because modules added over the last 15 years use different technology platforms such as e-filing, Central Processing Centre for returns or for TDS. “Now we are rebuilding everything and putting everyone under one structure.” The HR system is also being integrated to make details on postings and profile of officers accessible, the official added.

Similarly, the data warehousing project being implemented by the department will store all the electronic data at one place and build business intelligence applications to organise the mammoth data. Another project aptly tax 360 will do complete profiling of taxpayers by monitoring all their transactions like foreign travel and high value purchases.

The letters sent to 210,000 PAN card holders in the last few months who did not file their returns was a pilot of the data warehousing project where data from e-filing, TDS, and Annual Information Return are fed into.

“New technology tools will be used to help risk profiling of taxpayers on the basis of their transactions, but in a non-intrusive manner. This will help widen the tax base,” another official said.

Minister of Finance, P. Chidambaram who has been cracking a hard whip on tax evaders recently said that the tax officials should target non-filers and stop-filers to increase tax collections. "We are in favour of intelligence and technology-based tax collection system which is both non-intrusive and non-evasive," Chidambaram had said in May this year.

There are around 35 million taxpayers in the country currently and the centre's tax to GDP ratio stood at 7.8% in FY2012-13.

Neel Ratan, executive director at audit and consultancy firm PwC India said that various technology projects implemented by the government in the past have armed it with huge amount of electronic data of taxpayers. These are now ready to be analysed, indexed and compared.

“This is the foundation for the ongoing tech upgradation at the I-T department and I think the department is now ready to harness all the data available across different systems," he added.

However, challenges with such kind of data sharing have already started cropping up. In the case of the tax 360 project, the sales tax department of the Maharashtra government used the data available with various central agencies to get information about tax evaders.

The project seems stuck as five more states have asked the Centre to provide them data while the I-T department is not comfortable sharing certain information on this platform, said an official with the Central Board of Direct taxes.
Source:http://www.business-standard.com/article/pf/i-t-department-to-use-technology-tools-to-nab-tax-evaders-113082100931_1.html