Taxmen Tap Data Analytics to Uncover Benami Deals Number crunchers big help also as phone records, social media interactions turn into key data for I-T dept
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 .₹ 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 through 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, which are difficult to catch otherwise.”
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 now using advanced 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 call patterns, social media interactions, travel trends and income tax returns.”
If .₹ 5 lakh was deposited into a
bank account during demonetisation, the tax department checks the holder’s interactions on social media or on the phone. “Say, the account holder interacts with five people often. So those five people’s data — tax returns, phone records and social networking activities — can be analysed. If these five interact with 25 others, all that data can also be scrutinised and so on,” explained a person in the know.
Experts say demonetisation has brought several suspicious transactions under the tax department’s scrutiny
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.
According to Bloomberg, the government has spent around .₹ 1,000 crore on the data analytics Project Insight. The tax department is now also looking at social media platforms including Instagram, Facebook and Twitter, to correlate with tax returns.
So you can run, but you can’t hide, as one tax official explained in a humorous vein. “You use your driver’s name to invest in real estate, your maid’s bank account to deposit your black money during demonetisation. But you have to use your passport to go abroad and then you want to brag about it on Facebook too,” he laughed.