The Income Tax department is planning to implement the first phase of ‘Project Insight’ from May 2017 to monitor high value transactions, with a view to curbing the circulation of black money.
This project has been initiated for data mining, collection, collation and processing of such information for effective risk management with a view to widening and deepening tax base.
Project Insight will use big data analytics to match information from social media sites to deduce mismatches between spending pattern and income declaration.
The tax department will analyse mismatches in income declarations and spending patterns to trace tax evasions and black money, an official said.
The government has also made linking of PAN with Aadhaar mandatory to get a 360 degree view of a person’s income and assets.
The tax department had last year signed a pact with L&T Infotech for implementation of Project Insight, which is designed to strengthen the non-intrusive information driven approach for improving tax compliance.
This is part of the steps the government has taken to unearth and tax undeclared or illegal wealth.
The steps include launch of ‘Operation Clean Money’ after demonetisation of old higher denomination currency for collection, collation and analysis of information on cash transactions, extensive use of information technology and data analytics tools for identification of high risk cases, expeditious e-verification of suspect cases and enforcement actions.
The information technology-based Project Insight will strengthen the information driven approach for improving tax compliance.
The project will use technology to allow the government collate databases of IT returns, IT forms, TDS/TCS statements and Statement of Financial Transactions received from financial institutions. As part of Project Insight, a new Compliance Management Centralised Processing Centre (CMCPC) would also be set up for handling preliminary verification, campaign management, generation of bulk letters/notices and follow-up.Key Issues
Significance of ‘Project Insight’
- ‘Project Insight’ is an integrated platform that will utilize vast amount of information easily available on social media to conduct raids online rather than traditional way of conducting random searches, known as tax raids.
- It will use data mining, big data and analytics to scoop out tax evaders from social media platforms like Facebook, Twitter and Instagram.
- The Permanent Account Number (PAN) will be the unique identifier is used by the Income Tax department to link and analyse various transactions relating to the tax payers.
- This will enhance the 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
- The ‘Project Insight’ will be implemented in phased manner during the period 2016-2018. For its implementation, the IT department has signed a contract with L&T Infotech Ltd.
- It will also be leveraged for implementation of Foreign Account Tax Compliance Act Inter Governmental Agreement (FATCA IGA) and Common Reporting Standard (CRS).
- It will help in catching tax evaders in a non-intrusive manner using technology and without traditional intrusive methods like search and seizure.
- The integrated platform will play a key role in widening of tax base and data mining to track tax evaders.
- The reporting compliance management system of project will ensure that third party reporting by entities like banks and other financial institutions is timely and accurate.
- It will also set up a streamlined data exchange mechanism for other government departments.