The Income Tax department is leaving no stone unturned in making sure tax evaders are tracked down and accounted for. Come April 1, the well-off tax evaders in the country will have no place to hide. For, on that day the I-T department will roll out its much touted Project Insight, a tax tracker that uses data mining and big data analytics to flush out tax evaders.
For a country that grappled with tax compliance issues for years, the burgeoning of the uber wealthy class in the recent decades was another, more daunting, challenge. The country is home to teeming millions of millionaires, and the pace at which the rich class multiples their wealth has been increasing. But I-T department has been struggling with wide scale, smartly executed tax evasion for years.
The taxman believes the rollout of Project Insight will stop such large-scale evasion. The big data project has been in the works for the last several years. One of the primary means of identifying rich tax evaders is analysing social media platforms to find out mismatches between spending pattern and income declaration. The big data helps the government to go beyond traditional avenues of tracking wealth, like bank accounts and investment routes.
The Economic Times has reported that the I-T department has given its officials access the Insight portal on March 15. The report says that the project will be fully operational from April 1. Under this project the I-T department will have at its disposal a complete profile of all taxpayers.
The primary taxpayer profile under the Project Insight is the master profile, which holds information such as taxpayer's address, signature and I-T return profile. Then there will be another sheet on the taxpayer, the business intelligence segment. This will be crucial in identifying tax and income mismatches and tax evasion. Taxpayers will also be classified on the basis of parameters like income, profit and capital gains, the report says.
The tax department believes that the Project Insight will help it improve tax compliance through nonintrusive means. India has seen tremendous rise in the number or millionaires and billionaires in recent years but the rise in direct income tax collection hasn't been commensurate with the rise in wealth.
According to the Credit Suisse Global Wealth Databook, while the number of multi-millionaires worldwide grew 20 percent in the last five years, the growth rate in India was 56 percent. According to the Knight Frank Wealth Report 2018, the number of multi-millionaires rose 56 percent in the last five years and this class is projected to expand 71 percent in the next five years.
Interestingly, the Central Board of Direct Taxes (CBDT) said late last year that the number of taxpayers who earned more than Rs 10 million (Rs 1 crore) rose considerably to touch 140,000. That, according to the taxman, was a growth of about 60 percent over the last four years.
But does this paint the true picture? Does India have only less than 1.5 lakh people who earn more than one crore in a year? Are we talking about the economic super power that's supposed to overtake China and the US sometime in near future?
Maybe Project Insight will lead to more tax compliance, and thereby the creation of a more equitable society.