Taxman to follow tax dodgers on social media
Posting pics of foreign holidays, expensive bags on FB, or Instagram may land you in the income tax (IT) department's net.
PM Narendra Modi led government will begin amassing information from social media sites to crackdown on the tax defaulters. The new project is planning to collect virtual information which will not only collect information from traditional sources like banks but also from social media sites.
Starting next month of August, this new system which will be called 'Project Insight' will match residents' spending patterns with income declarations, as per the report.
'Project Insight' which will complement the world's largest biometric identity database has been built over a period of seven years at a cost of about 10 billion rupees ($156 million). This will be India's most ambitious tax overhaul policy till date and the best time to introduce it could be right after the implementation of the GST. The reason why the government was forced to introduce this policy is that even though India is the world's fastest growing economy, revenues aren't keeping pace, bloating Modi's budget deficit and triggering anxiety about over-zealous tax sleuths.
The move will enhance the department's ability to monitor the flow of funds and will provide an audit train of high value transactions and curb circulation of black money.
Interestingly, India won't be the first country to have a system like this. Countries including Belgium, Canada and Australia are already using big data to unearth tax evasion.
In the first phase all existing data including credit card spends, property and stock investments, cash purchases and deposits will be migrated to the new system.
The second phase will be rolled out by December, during which data analytics will mine, clean and process the information.
In the last phase, which will go live around May 2018, advanced systems will be used to predict future defaults and flag risks.
A new Compliance Management Centralized Processing Centre (CMCPC) will also be setup as part of the Project for handling preliminary verification, campaign management, generation of bulk letters/notices and follow-up. The new CPC will not only promote voluntary compliance but also enable taxpayers to resolve simple compliance related issues in an online manner without visiting the Income tax office.