Instagram is Tipping Off India’s Taxman

According to an article in Bloomberg, India’s government will begin amassing virtual information collected not just from traditional sources like banks but also from social media sites like Instagram and Facebook, as it looks to match residents’ spending patterns with income declarations. Officials will be able to spot those who pay too little tax without raiding offices and homes as they currently do.

While India’s economy is among the fastest-growing in the world, there is a disconnect with its revenue. This not only bloats the budget deficit, but it also triggers anxiety about overzealous tax sleuths. To combat this, Project Insight, built over seven years at a cost of about $156 million, will complement the world’s largest biometric identity database and India’s tax overhaul, Bloomberg reported.

“Data analytics is the way forward for tax administrations across the world,” says Amit Maheshwari, MP at New Delhibased Ashok Maheshwary and Associates. “This will also put an end to harassment by tax officials as there will be no public interface. Perceived randomness in scrutiny will come to an end.”

The project has three major phases:

  1. All existing data, including credit card spends, property and stock investments, cash purchases and deposits, will be migrated to the new system and a central team will send postal or email blasts to prod residents to file tax declarations. There will not be any physical interaction.
  2. Data analytics will mine, clean and process the information. Individual spending profiles will be created and inquiries will be more targeted. This phase is planned on being rolled out by December.
  3. Advanced systems will be used to predict future defaults and flag risks (live around May 2018).