Govt forms wing to use big data in big way against tax evaders

The Directorate General of Analytics and Risk Management (DGARM) will be under the Central Board of Excise and Customs (CBEC), mainly to use internal and external sources for detailed data mining to generate actionable inputs, the revenue department said in an office memorandum.

The DGARM, which was set up on July 1 coinciding with the rollout of the Goods and Services Tax (GST), has four verticals headed by an official of rank of additional director general (ADG) or principal ADG.

It will function as an apex body of CBEC for data analytics and risk management and will report to the chairman, CBEC.

Incidentally, the CBEC is to be renamed as the Central Board of Indirect Taxes and Customs (CBIC) after excise duty along with service tax and a dozen other central and state levies were subsumed into GST.

"The data analytics and processing coupled with intelligence inputs would inter-alia provide the CBEC the national and sub-national perspective for policy formulation. The field formations of CBEC are also expected to gainfully and effectively utilise the data and other inputs shared by the DGARM," the memorandum said.

As part of the DGARM, a National Targeting Centre has been set up, which is responsible for application of a nationally coordinated approach to risk analysis and targeting of risky goods and passengers crossing the borders of the country.

"It shall provide 24 7 operational risk interdiction supports to field formations of the CBIC," it said.

The centre in question will institutionalise coordination with other government departments and other stakeholders for sharing databases, information, intelligence and reports to build risk profile of entities.

Also, a 'Centre for Business Intelligence and Analytics' (CBIA) has been set up that will be responsible for identification of information requirements of the CBEC. It will utilise data feeds from internal sources.

The CBIA shall be responsible for providing analytical inputs to support identification, targeting and risk management functions of the National Targeting Centre, the Risk Management Centre for Goods and Services Tax and the Risk Management Centre for Customs.

The third vertical of the DGARM is the 'Risk Management Centre for Goods and Services Tax' which will institutionalise mechanism to collect necessary inputs, adopt coordinated approach and share the outcome for risk-based identification for the purpose of scrutiny, audit and enforcement functions.

Besides, the 'Risk Management Centre for Customs' will be responsible for assessment and targeting of risky cargo crossing the borders through sea, air and land.

The DGARM will do detailed data mining and analysis to generate outputs for focused and targeted action by field formations and investigation wings of the CBEC.

It will, in conjunction with DG Systems, organise, evaluate and interpret data for effective, efficient and targeted policy formulation and revenue administration, the memorandum stated.

Through these four verticals, the DGARM will work in close coordination with the Directorate General of Systems and the Data Management Directorate General of Revenue Intelligence, the Directorate General of Goods and Services Tax Intelligence, the Directorate General of Audit and Directorate General of Valuation.

With almost 91 lakh new taxpayers brought in the tax net last fiscal, the CBDT has asked the Income Tax Department to increasingly identify those who can pay tax but are not doing so, with a special focus on smaller cities.

Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra has written a letter to his regional I-T heads across the country asking them to "maximise" efforts for widening of the tax base during the current financial year of 2017-18.

The CBDT frames policy measures for the tax department.

"Huge opportunities for identification of potential taxpayers have been opened up by data mining and data analytics conducted (by the department) in the wake of demonetisation and operation clean money," Chandra said in the letter, which has been accessed by PTI.

Calling widening of tax base as one of the "most important" policy objectives of the CBDT, he said various steps have been taken to increase the tax base which have shown appreciable results.

"It is quite encouraging to note that almost 91 lakh new taxpayers were added during financial year 2016-17. However, considering the increase in economic activities, both in the organised as well as unorganised sectors, there is a large scope for further widening of the direct tax base in the country," he stated in the letter.

A senior official privy to the development said while no targets have been set by the CBDT in this context, it is estimated that about two crore fresh taxpayers could be easily added to the I-T net within this fiscal, if these measures are effectively implemented.

At present the I-T department has about 6-7 crore registered taxpayers.

The CBDT boss asked the taxman to tap data provided by the data mining and non-filers identifying database of the department, gather local intelligence, obtain inputs from market associations, trade bodies and others to find out more such people who are eligible to pay income tax but are not doing so.

Data from the intelligence and criminal investigation wing of the department and from the operation clean money should also be used, he said, to send "request letters" to all potential taxpayers expeditiously and in a time-bound manner.

He suggested that the tax officers can hold public sessions in this context.

"Awareness meetings and outreach programmes may also be used for supplementing these efforts so as to encourage voluntary compliance, especially in tier-2 and 3 cities," the CBDT chairman wrote.