Think twice before you flaunt your lavish lifestyle on social media. The taxman will be keeping an eye come April 1. The Income Tax department is all set to implement its brainchild - Project Insight - in a bid to crack down on tax evaders.
Project Insight is a tax tracker built over a period of seven years at a cost of about Rs 1000 crores. It is expected to allow tax officials to develop comprehensive, 360-degree profiles of Indian taxpayers. Earlier, the I-T department used to rely largely on bank records of individuals to calculate their tax liabilities.
But, with Project Insight, the I-T department is planning to collect information from a variety of sources including social media accounts such as Facebook, Twitter and Instagram.
This is expected to help the tax department match the spending patterns of taxpayers with their income declaration and gauge their liability. For example, if a taxpayer uploads photos of his new car, house or foreign trip, which appear incompatible with his declared income, tax officials will be able to use big data to detect a potential gap between his earnings and expenditure. If they find a mismatch, then they will most likely carry out a raid at his home or office.
With Project Insight, India has joined countries such as Belgium, Canada and Australia that are already using big data to detect tax evasion, Bloomberg reported. The UK government implemented a similar system called 'Connect' to track down tax evaders. The effective execution of this system is said to have earned the government $5.4 billion in revenue and the number of criminal prosecutions had also climbed to 1,165 from a mere 165 per year, Bloomberg reported, quoting the London-based Institute of Financial Accountants.
This is not the first time the I-T department is trying to execute Project Insight. The initial plan for this platform was announced in July 2016, with the government saying that the first phase was expected to go live in May 2017. The finance ministry said that the I-T department had signed a contract with L&T Infotech Ltd. to help build the tax tracker.
The data collected by Project Insight will be segregated, Business Standard reported. The data gathered includes taxpayers' addresses, signatures and I-T return profiles. It is understood that there will also be a segment named 'business intelligence' to identify tax evaders. The Geographic Information system will help the I-T department zero in on a particular area if it requires more focused action. It will also categorise taxpayers on the basis of their profit, income and capital gains.