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

The Economic Times - - Companies: Pursuit Of Profit - Sachin.Dave@ times­

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.”


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


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.

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