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Corruption in India: Data Analytics to Help India Catch Tax Thieves

People of India Protesting Against Narendra Modi Government on January 18, 2017

People of India Protesting Against Narendra Modi Government on January 18, 2017

Tax is the money that ordinary citizens are forced to give to the government thieves who squander that money at will. ~ Rakesh Raman

The Income Tax Department (ITD) of India initiated Wednesday its Operation Clean Money. Initial phase of the operation involves e-verification of large cash deposits made during 9th November to 30th December 2016.

Data analytics has been used for comparing the demonetization data with information in ITD databases. In the first batch, around 18 lakh (1.8 million) persons have been identified in whose case, cash transactions do not appear to be in line with the tax payer’s profile.

ITD has enabled online verification of these transactions to reduce compliance cost for the taxpayers while optimising its resources.

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The information in respect of these cases is being made available in the e-filing window of the PAN holder (after log in) at the department’s portal. The PAN holder can view the information using the link “Cash Transactions 2016” under “Compliance” section of the portal.

The taxpayer will be able to submit online explanation without any need to visit Income Tax office. Email and SMS will also be sent to the taxpayers for submitting online response on the e-filing portal.

Taxpayers who are not yet registered on the e-filing portal can register by clicking on the ‘Register Yourself’ link. Registered taxpayers should verify and update their email address and mobile number on the e-filing portal to receive electronic communication.

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A detailed user guide and quick reference guide is available on the portal to assist the taxpayer in submitting online response.

Data analytics will be used to select cases for verification, based on approved risk criteria. If the case is selected for verification, request for additional information and its response will also be communicated electronically.

The information on the online portal will be updated on receipt of new information, response and data analytics. The response of taxpayer will be assessed against available information.

In case explanation of source of cash is found justified, the verification will be closed without any need to visit Income Tax Office. The verification will also be closed if the cash deposit is declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY).

The taxpayers covered in this phase should submit their response on the portal within 10 days in order to avoid any notice from the ITD and enforcement actions under the Income-tax Act as also other applicable laws.

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