Beware! Income Tax Department is Using Big Data Analytics to Track Expenditure Patterns

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The applications of big data are gaining a strong foothold in every industry. Recently, the Government of India has adopted Big Data in its fight against tax evaders. This will make tax evasion more difficult.

The programme – “Project Insight”, costing 1,000 crores has been in development for the past three years. Tax evasion was always difficult to monitor and manage given the traditional tools. However, with several countries like USA and UK already using big data for tax management, India has also joined this league.

In this article, we will see how Big Data is helping to catch tax evaders.

Income Tax Department Will Use Big Data to Catch Tax Evaders

In India problems like failure to pay tax dues, submission of false tax returns, inaccuracy in financial statements, lack of income reports, storing wealth in foreign countries is becoming an increasing trend.

According to Finance Minister Arun Jaitley, 10 million Indians were exempt out of 37 million Indians who filed for tax returns. This leaves just 27 million to pay taxes. This accounts for a little more than 2% of the entire country. This is an abysmally low percentage of tax-payers in India.

Big Data in income tax department

Source – News18

Many times, people purchase products or indulge in a lavish lifestyle beyond their monetary means as per their tax returns.

This does not often come up on the radar of tax officials as it is not possible to analyze all of the information on a manual level. However, with the emergence of Big Data and Data Analytics technologies, it is now possible to analyze all of the large scale information.

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The 2016 operation to curb the usage of black money provided a key revelation to the Income Tax Department to upgrade their tax collection procedures and utilize an efficient methodology to track tax evaders. This led to the inception of Project Insight.

India is now one of the several countries that use Big Data to track tax evasion. In the United States, IRS has been using Big Data on its phone surveillance records, tracking social media accounts and using extensive data mining to develop analytical algorithms for identification of tax compliance issues.

Similarly, the UK Government had implemented big data analytics in their income tax segment and observed an increase of $ 5.4 billion in tax return revenue.

With a rapid expansion in data, it is becoming increasingly difficult to analyze all of it through traditional methodologies. Moreover, a country of the huge population like India cannot only rely on traditional methods of survey.

Many of the analytical problems could not be solved before due to high expenses. Also, the analytical platforms could not handle such large volumes of data. Moreover, most of the data collected were not present in the electronic form.

All these problems made it difficult to manage and analyze large amounts of data. Therefore, we need Big Data to analyze an astronomical amount of data that is generating every day.

In the light of the above issues and the limitations in the current technology, the Income Tax Department has introduced Big Data Analytics to monitor and track the social networking profiles of people and find patterns of inconsistencies between their income and spending. Therefore, the Income Tax Department has launched Project Insight for this purpose.

What Exactly is Project Insight?

Project Insight is a combination of Big Data Mangement System and Machine Learning. It is a composite analytical platform that will be able to store and manage the income and expenditure of citizens as well as possess analytical capabilities to analyze the patterns of inconsistencies within these two features.

Project Insight’s big data analytics system will actively track the social media of the citizens. It will search for exorbitant purchases and track people indulging in lavish lifestyle which does not comply with their income and tax returns.

This means that based on the activities on social media and the purchasing history, IT departments can analyze and find out the discrepancies in the documented earning and actual spendings. Moreover, the data gathered will include the addresses of taxpayers and their IT return profiles

. All these attributes will ensure real-time monitoring of the citizens. There is also a business intelligence platform that includes large scale data warehousing and analysis of data. It will help the income tax officials to track high-value transactions and inhibit the flow of black money.

The government allied itself with L&T Infotech to implement this project. It will help to combine the databases of IT returns, TDS & TCS statements, IT forms and forms from financial institutions of the country.

Also, as part of Project Insight, a Compliance Management Centralised Processing Centre will handle verification, management of campaign and the generation and follow-up of letters and notices.

The Income Tax Department has introduced a 360 Degree vision profiling that allows them to identify non-filers of tax through social media monitoring.

Now is the Time to be Aware of the Term – Big Data

As concluded by the cases mentioned above, big data has revolutionized all walks of life. It is being extensively used fields like finance, health, manufacturing, and transportation. With the massive explosion in data, there is a huge requirement for people who are specialized in handling data.

We generate about 2.5 quintillion bytes of data every day. It has become the new oil. This form of data is mostly unstructured and cannot be managed with the traditional RDBMS.

Big Data provides all the tools and means necessary to extract store and analyze to gain insights for help companies make careful data-driven decisions.

As mentioned above, most of the data generated by us is present in the unstructured format and we need specialized Big Data Engineers and Data Scientists to handle such a huge volume of unstructured information.

From the above-discussed case scenario of analyzing tax returns, Big Data is also used to improve customer experiences, predicting sales, analyzing genomic sequences, customer churn analysis, etc. With Big Data, companies are able to explore new areas that were previously undiscovered, given the lack of technology and tools.

With the effective collection of data and its analysis, organizations gain deep insights about their products, clients, their performance and their competitors.

The opportunities associated with Big Data are as vast as data itself. With the huge expanse in data, there is also a huge increase in the requirement for people who are specialized in handling data. Many people are looking to transform their careers into that of Big Data. It is seen as the key to landing a big job in the industry.

The current Big Data pool is shallow. As a result, more and more companies are looking forward to hiring Big Data Specialists and are offering them lucrative salaries. Also, if you have the knowledge of big data and its tools, you can also work as a freelancer.

What Skills Will You Require to Master Big Data?

In order to learn Big Data, there is no essential background skill that is required. However, in order to better grasp Big Data, you must have knowledge of a programming language, preferably Java. You must be familiar with the basics of programming. For Big Data, the three programming languages you should also know are – Java, Scala and Python.

While knowledge of Python and Scala is not mandatory, it will be beneficial for getting in-depth insight into Big Data. People with the knowledge of Java will find the learning curve of Scala to be much easier as Scala is a Java proprietary language.

While Scala is primarily a functional programming language, it is useful while working with Apache Spark which is a popular Big Data tool. Apart from this, you must have a working knowledge of Python, which is increasingly becoming the most popular choice of programming for Data Analytics.

Not to mention, most of the Big Data tools support Python as their programming language.

Other than this, all you need to learn Big Data is a curiosity to learn and explore the concepts of Big Data technology.

Popular Big Data Tools You Must Know

In this section, we will look at two of the popular big data tools. These technologies are – Apache Hadoop and Apache Spark. These technologies have made Big Data a possibility and a skill that can be acquired by anyone, owing to their open-source nature.

Apache Hadoop – Apache Hadoop is an open-source big data platform. It is written in Java Programming language but offers support in languages like C++, Ruby, Python and Java. This technology is the most sought after in industries.

Hadoop is renowned for its distributed database system called Hadoop Distributed File System. It consists of MapReduce which is a powerful framework responsible for processing large volumes of data.

Hadoop is also popular for its data locality concept which increases the efficiency of Hadoop applications. Due to this reason, it is widely preferred by industries and is a must know tool for Big Data enthusiasts.

Apache Spark – Apache Spark is another big data tool which is popular for its lightning fast computational capabilities. It is an evolution of Apache Hadoop that allows high-speed streaming of data and quick access to SQL workloads with machine learning capabilities.

As a matter of fact, Spark can run 100 times faster than MapReduce. Due to this reason, it is increasingly becoming popular among industries who are looking for lightning fast big data platforms.

We saw how Big Data has revolutionized other industries and how Big Data professionals are in huge demand. You could be the next Big Data Expert who is going to catch tax evaders, start your Big Data learning now.

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