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This is how I-T department is using data analytics to catch tax evaders

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. 
Uncovering the culprit would take them through a confounding maze of data — phone records, credit card and PAN details, tax returns and even social media platforms. Here’s where data analysts and number crunchers come into play. “It’s virtually impossible to go through various structured and unstructured data sources and make sense of them,” said an official. “But data collected via various sources leaves a pattern and analytics can raise red flags that tax officers can investigate further.” 
Rise of number crunchers
Amit Maheshwari, partner, Ashok Maheshwary & Associates, concurs. “Data analytics would be an extremely helpful tool in social and financial profiling of taxpayers and to generate valuable and actionable insight. This would be particularly useful in discovering benami properties.” 
Experts say demonetisation has brought several suspicious transactions under the tax department’s scrutiny via cross-referencing older data with that collected on cash deposits. 
“Demonetisation, in some way, was a trigger and data analytics can establish linkages between people, their income and investments and can raise red flags,” said Jaskiran Bhatia, partner, tax analytics, Deloitte India. 
“The government is using advance tools for both structured and unstructured data and can analyse and establish relationship between different entities or people going up to 16 levels deep, based on different set of data such as addresses, phone calls, social media interactions, travel trends and I-T returns.” 
Legal is easier 
Combined with the GST data, it may be tough to evade the taxman now. “As the informal economy shrinks further post demonetisation and GST, deploying data analytics is the future of the tax administration, which is keen to increase the tax:GDP ratio. We believe this would be a game-changer,” said Maheshwari. 
The Economic Times, New Delhi, 03rd August 2017


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