I-T department using data analytics in order to catch tax evaders

MUMBAI: It’s not unusual to form an investment company for buying an expensive residential apartment. But in the case of a city Golf Link Road apartment, the ultimate beneficiary was found to be director in an investment company —living in a modest house in Seelampur, earning less than Rs 1 lakh a year and not owning a car or a credit card. Income-tax officials suspected it to be a benami transaction, a property bought by a businessman in his driver’s name.

In order to uncover the culprit, the I-T department would have to go through — tax returns, credit card and PAN details, phone records and even social media platforms. Here the number crunchers and the data analysts come into play. An official stated, “It’s not possible to go through various unstructured and structured data sources and make some sense out of them. But the data collected through various sources will leave a pattern and analytics could raise red flags which will help tax officers in investigating the case further.”

Rise of number crunchers

Amit Maheshwari, the partner of Ashok Maheshwary & Associates elaborated, “Data analytics would be a helpful tool in financial and social profiling of taxpayers and will help in generating valuable and actionable insight. This would be used in discovering benami properties.”

Experts have noticed that demonetisation has brought various transactions which were suspicious, under the scrutiny of tax department by cross-referencing the data collected on cash deposits with that of older data. Jaskiran Bhatia, partner at tax analytics, Deloitte India stated that, “Demonetisation, was a trigger in some way and data analytics will help in establishing linkages between people, their income and investments made by them, which will in turn raise red flags”.

“Advance tools are being used by the government for both unstructured and structured data. This will help in analysing and establishing relationship between various people or entities going upto 16 levels deep, based on sets of data like – phone calls, social media interactions, addresses, travel trends and I-T returns.”

Legal is easier

Combining the GST data, it will not be easy to evade the taxman. Maheshwari mentioned, “After demonetisation and GST, the informal economy has further shrunk. The future of tax administration is deploying data analytics, which will lead to an increase in the tax:GDP ratio. This can be believed to be a game-changer.”

ET View: Adopt Torrens system

It makes eminent sense to deploy big data analytics in order to track benami deals. Unclear titles enables money laundering via real estate deals. There is a need to ensure that property holders have guaranteed ownership and for this, Torrens system should be adopted by India wherein land ownership is registered directly by the state. Guaranteed titles will curb sham realty deals.