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"India's performance on the 'Tax Revenue as a percentage of GDP parameter is by far the lowest within the BRICS economies.Estimates peg the effective taxpayers in India to less than 4-5% of its population.The current government has shown emphasised focus on increasing tax base and tackling black money through policy interventions like demonetisation, GST roll out, tax agreements, Benami Property Act, etc. These initiatives will allow the revenue departments to develop a data supply chain i.e.capture and store data at an unprecedented scale, and speed. This data can be supplemented with data generated through digital transactions, JAM (Jan Dhan, Aadhaar &amp; Mobile) trinity, and data from across industries.However, having this data alone will not help unless there is a focused approach towards making this data intelligent and generate insights.With skills and manpower constraints across tax departments, the challenge will remain in identifying tax evasion andor fraudulent behavior non-intrusively . The ability to identify misdeclarations and frauds has historically been dependent upon the experience of the tax investigators, which has often led to biases and has occasionally resulted in poor citizen experiences.WAY FORWARDIt is here that a big data and advanced analytics platform can play a critical role in integrating and exploiting the multiple data sources to help tax departments in efficient discharge of their responsibilities and bridging the tax gap. This will not only help them build integrated views of tax filers and individual tax submissions but also empower them to respond in a more targeted way , thereby using resources optimally . The platform can yield better outcomes right from registration of business to filing returns, risk profiling of taxpayers, identifying scrutiny cases, returns assessments, post-filing audits in real time to better servicing and improving experience of taxpayers. It will also empower the respective departments in confronting tax malpractices like circular trading, hawala dealing, input tax credit (ITC) over-claims, sales under-declarations, transfer pricing manipulations, etc.As these malpractices are constantly evolving, the platform will help identify data patterns that may not otherwise be discernible to human analysts. For example, the platform can help unearth complex business relationships, identify circular trading and hawala dealers that merely exist on paper and issue fictitious invoices to enable customers to claim credit on the basis of these fictitious invoices. This is achieved by running algorithms and models to cross reference the purchases as submitted by dealers against the corresponding information of sales as submitted by them, which otherwise would have been extremely cumbersome given the nature of data, data volume and data quality .It's important to note that the advanced analytics approaches provide ultra-early detection, reduce false positives and empower authorities to run scenario models enabling them in better policy formation and planning. These would result in speedy and near real time analysis of information, which would create facility to handle more cases with ease and be more effective.So why hasn't this been done often enough, you might ask? Implementation by no means is as straight forward as it sounds. Key business considerations around different connotations of the same term, differences in jurisdictional applicability of an `entity', to name a few, would need to be built into the models before any meaningful analysis can be carried out. The solution needs to reward the honest taxpayers and motivate others to file appropriate returns. For all this to fructify, there needs to be a strong push from tax departments for data sharing, em bracing advanced analytics and partnering with experts to help build the right capabilities. A few progressive government departments have commenced their journey and started to reap the benefits.(Writers are Partner, Advanced Analytics &amp; Data Sciences, PwC India and Associate Director PwC India respectively)Follow and connect with us on Twitter, Facebook"
<https://cfo.economictimes.indiatimes.com/news/how-big-data-analytics-will-help-bridge-indias-tax-gap/56215630>