Are you a social media addict? Is a Facebook post must for you whenever you buy any tech gadget or a new vehicle? And if you thought that an Instagram post about your chic holiday in Maldives only generated ‘likes’, then think again. Because all your social media activities from next month might lead to an Income-Tax department raid at your place.
Wondering how is that possible? Well, starting from August, PM Narendra Modi-led government is planning to introduce a new warehouse of virtual information collected not just from traditional sources like banks but also from social media sites. This new system, called ‘Project Insight’ will dig into your social media accounts and match your spending patterns with income declarations, as per the report.
Built over 7 years at a cost of about Rs. 1,000 crore ($156 million), ‘Project Insight’ will complement the world’s largest biometric identity database and India’s most ambitious tax overhaul as policy makers try to get more people to pay up.
Using advanced machine learning, data mining and big data, Project Insight will map every Indian’s spending pattern, with the income generated, and find out the tax which needs to be applied.
Data analytics is the way forward for tax administrations across the world, as it will remove ambiguity and introduce more transparency into the whole process. Countries including Belgium, Canada, and Australia are already using big data to detect tax evasion, and the UK has a similar system in place called ‘Connect,’ which is estimated to have cost around £100 million. Since its inception in 2010, it has prevented the loss of $5.4 billion in revenue. Italy recovered more than 14.2 billion euro as tax payments in 2014 in its bid to crack-down on tax-evaders. This was done through digging out mobile phone data, social data, web-based data, and health-related data from various accounts.
This will increase tax compliance up to 30-40% during the first phase of the project, Bloomberg reported. During this time all existing data—including credit card spends, property and stock investments, cash purchases and deposits—will be migrated to the new system and a central team will send postal or email blasts to prod residents to file tax declarations. There will be no physical interaction, the report added.
The second phase of the project will be rolled out by December during which data analytics will mine, clean and process the information. Individual spending profiles will be created and inquiries will be more targeted. In the last phase, which will go live around May 2018, advanced systems will be used to predict future defaults and flag risks, the report said.
However, the Ministry of Finance has not yet made any official statement in this regard.
