Most people love posting pictures and videos on social media. Be it an expensive trip to a posh resort or purchase of a costly car, people want to show off and post pictures on social media. Doing so can land you in a lot of trouble. To unearth undeclared income and catch tax evaders, the Indian government has come up with Project Insight. Project Insight will promote voluntary compliance; prevent non-compliance and have a fair and judicious tax administration.
Under this project, the tax department makes use of data analytics and data mining to catch tax evaders by obtaining information from their social media accounts like Facebook and Instagram.
This is done with the intention of identifying mismatches between spending patterns and the income declaration. In case of any mismatches, the tax department would raid the tax evader’s home or office. So, pictures of a lavish wedding, foreign trips, new houses, and costly cars posted by taxpayers on social media, are used to identify the status of the person in relation to the income reported in the income tax return (ITR).
See Also: 5 Income Tax Notices You Receive
This project will make more people pay tax, which means less tax evaders. Right now, few people are paying their taxes honestly. Due to this, the revenue which is required by the government for development and welfare projects slows down. To escape from paying taxes to the government, many people hide their income by not disclosing it to the tax authorities. But, with the implementation of this project, it will be difficult for people to evade taxes.
The project would incorporate the reporting requirement, for which a reporting portal has been launched. Its reporting compliance management system makes sure that compliance by third-party entities like banks and other financial institutions is timely and accurate.
The Income Tax department will create a 360-degree profile of taxpayers, including new and non-filers to assess accountability and tax liability. This profile consists of details like transactions, relationships, social networking accounts, IT returns, IT forms, TDS/TCS statements and Statement of Financial Transactions received from financial institutions.
A 360-degree view of the taxpayers profile, will improve the I-T department’s ability to observe the flow of funds and give an audit trail on high-value transactions and check the circulation of black money. This project will not just help identify the tax evaders, but also check the accountability and authenticity of existing taxpayers.
India isn't the only country which is using big data to keep a check on tax evasion. As per the report, countries like Belgium, Canada, and Australia are already using big data to check tax evasion.
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