Mumbai, April 26, 2017

Project Insight to help assess mismatch between lifestyle and declared income

In a bid to widen the tax net, the government will soon use mapping applications to track tax evaders down to their homes. As part of its Project Insight, which is going live next month, the Central Board of Direct Taxes will use locational intelligence to assess the affluence of a taxpayer and how it matches with the income declared in his/her tax return.

The government is using the services of digital mapping company MapmyIndia to sniff out people who may be living in an affluent locality but not paying taxes corresponding to their lifestyle.

MapmyIndia has supplied the government cartographic data for the entire country with each residential address and a geocoding engine, which transforms the address to a location on the Earth’s surface (spatial representation).

Drilling down

It is also providing data on population, number of households and their income levels. Using the addresses of PAN card holders, the Tax Department will be able to locate them on a map and aggregate the data at the locality level.

Since all high-value transactions also require that tax be collected at source, it will be easy for the department to assess whether an individual’s expenses are in tune with his or her income level.

For instance, tax has to be collected at source for all vehicles priced above Rs.10 lakh, as with jewellery purchases over Rs.5 lakh and any goods worth over Rs.2 lakh purchased with cash. This gives a lead to the government about the affluence of a person and whether he is paying taxes accordingly. “The department wants to check compliance. If you are declaring a certain income and have some expenses, they are trying to match the two. Earlier, the data to do this was not there. Now, the government has the data in digital form and wants to centralise it,” Rohan Verma, ED and CTO, MapmyIndia, told BusinessLine.

The Tax Department will also check other parameters such as whether a person who has declared a self-occupied property and is claiming tax benefits on it is actually staying in that house or not.

Eye on the ground

I-T Commissioner Sanjeev Singh said mapping will also make it easy to send out a government official for personal verification. “When we send out a person for verification, an app can guide him to the place. Locational services will also help decide the officer, whose office is closest to the resident, to investigate a case,” he added.

Speaking at a recent conference, Singh had said the Tax Department wants to know how, in the same locality, a salaried person is paying tax on an income of Rs.70 lakh while a private trader next door was showing only Rs.7 lakh in income.

“Unless you are able to locate the area, which has a common affluence, it will not be possible to widen and deepen the tax base,” he said.

In his Budget speech, Finance Minister Arun Jaitley had said that against an estimated 4.2 crore persons employed in the organised sector, only 1.74 crore file returns for salary income.

Similarly, of the informal sector’s 5.6 croresmall businesses, only 1.81 crore had filed returns.

[The Hindu Business Line]