Big Data in Income Tax Department

Big Data in Income Tax Department: When honorable Prime Minister of India Narendra Modi began his first-ever televised address to the nation on 8th Nov-16, there was a great interest among the people to know what it was all about. But unexpectedly there was a shock to the nation when PM announced that from the same day the Rs.500 and Rs.1000 currency notes would be halted to track black marketers and the black money they carry. Shri Narendra Modi also revealed that anyone having money in these denominations can get them exchanged or deposit them in their accounts with some limitations that were also declared. It is considered to be one of the latest Big data applications in the Banking sector.

Now the question which we should be aware of is – How is the government or IT department going to track the black money that has been deposited and how will they separate the black money holders from sincere taxpayers? Amongst more than 1.25 Billion populations and 100s of millions of bank accounts, it is a big question that how the IT department will find out differences? Like the Software industry Income Tax department is also going to use the latest and hottest technology BIG DATA.

IT officials to manually compare tax/account data with the data that it is collecting from banks is practically impossible. Big Data Analytics is being used to look into the irregularities which will then be thoroughly inspected by tax officials. For the first time, our government will be using Big Data analytics on such a large scale to separate through personal taxes.

The Big Data tools are not only just used to collect details about the money being deposited by the individual but it will also be used to gather information like tax paid by the individual in past years, the corporate tax that his company has paid, number of employees he has in his company and if they have also added any money recently and other tax-related data. If irregularities are observed, these Big Data tools will raise red flags/alerts. This would help tax officials to finally come to conclusion regarding his genuineness or be a black marketer and then they could issue notices to individuals based on this after December 31.



As Big Data can handle massive volumes of data in the range of PBs or 100s of trillions of records, it will help IT professionals to analyze the Transactions / Account details / Tax information efficiently and quickly. 

Income Tax Department is Using Big Data Analytics to Track Expenses

The applications of big data are achieving a strong position in every industry. Just, the Government of India has embraced Big Data in its fight against tax escapers. This will make tax escape more difficult. The program – “Project Insight”, costing 1,000 crores has been in development for the past three years. Tax escape was always difficult to monitor and manage given the conventional tools. However, with different countries like the USA and the UK already using big data for tax management, India has also joined this union. In this part of the tutorial, we will learn about how Big Data is helping to catch tax escapers.

Income Tax Department Will Use Big Data to Catch Tax Escapers

In India setbacks like failure to pay tax dues, submission of false tax returns, the wrongness in financial statements, lack of income reports, storing wealth in foreign countries is becoming an increasing trend. According to Finance Minister Mr.Arun Jaitley, 10 million Indians were excused 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 a low percentage of tax-payers in India.

Several times, people purchase products or indulge in a luxurious lifestyle beyond their financial means as per their tax returns. This does not frequently come up on the radar of tax officials as it is not possible to evaluate all of the information on a manual level. However, with the arrival of Big Data and Data Analytics technologies, it is now possible to evaluate all of the large scale information.

The 2016 operation to control the usage of black money provided a crucial expose to the Income Tax Department to update their tax collection procedures and utilize an effective approach to track tax escapers. This led to the beginning of Project understanding. India is now one of the different countries that use Big Data to track tax escape. In the United States, IRS has been using Big Data on its phone surveillance records, tracking social media accounts, and using large data mining to develop analytical algorithms for identification of tax compliance issues. Correspondingly, the UK Government had executed 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 evaluate all of it through traditional approaches. Additionally, a country of a 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. Moreover, the analytical platforms could not handle such huge 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 evaluate large amounts of data. Therefore, we need Big Data to evaluate an astronomical amount of data that is generating every day.

In the light of the above issues and the restrictions in the present 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. Hence, the Income Tax Department has launched Project vision for this purpose.

What Exactly is Project Insight?

Project Insight is a grouping of Big Data Management System and Machine Learning. It is a composite analytical platform that is capable to store and manage the income and expenses of citizens as well as the group’s analytical capabilities to evaluate the patterns of inconsistencies within these two features.

Project Insight’s big data analytics system will actively trace the social media of the citizens. It will search for excessive purchases and track people indulging in a luxurious lifestyle that does not fulfill their income and tax returns. This means that based on the activities on social media and the purchasing history, IT departments can evaluate and find out the differences in the documented earning and actual expenditure. Additionally, the data collected will include the addresses of taxpayers and their IT return profiles. All these characteristics will ensure real-time monitoring of the citizens. There is also a business intelligence platform that includes large scale data warehousing and evaluation of data. It will assist the income tax officials to track large transactions and prevent the flow of black money.

The government associated itself with L&T Infotech to implement this project. It will help to merge the databases of IT returns, TDS & TCS statements, IT forms, and forms from financial institutions of the country. Also, as part of Project understanding, a Compliance Management integrated Processing Centre will handle verification, management of the campaign, and the generation and follow-up of letters and notices.

The Income Tax Department has presented 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 transformed all walks of life. It is being highly used in fields like finance, health, manufacturing, and transportation. With the huge explosion in data, there is a huge requirement for people who are specialized in handling data. We create about 2.5 quintillions of bytes of data every day. It has become the new fuel. This form of data is mostly unstructured and cannot be managed with the traditional RDBMS. Big Data offers all the tools and means necessary to extract store and evaluate to gain visions to help companies make careful data-driven decisions.

Start Learning Big Data With Industry Experts

As mentioned above, most of the data generated by users are present in the unstructured format and we need to experience Big Data Engineers and Data Scientists to handle such a huge volume of unstructured data. From the above-discussed case scenario of evaluating tax returns, Big Data is also used to increase customer experiences, predicting sales, evaluating genomic sequences, customer churn analysis, etc. With Big Data, companies can explore new areas that were previously undiscovered, given the lack of technology and tools. With the effective collection of data and its evaluation, organizations gain deep insights into their products, clients, their performance, and their competitors.

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

The present Big Data pool is shallow. As a result, more and more companies are looking forward to hiring Big Data Specialists and are offering them a good amount of salaries. Additionally, if you know big data and its tools, you can also work as a freelancer.

What Skills Will You Require to Master Big Data?

To become skilled at Big Data, there is no fundamental background skill that is required. However, to better understand Big Data, you must have familiarity with a programming language, preferably Java. You must be familiar with the fundamentals of programming. To learn Big Data, the three programming languages you should also know are – Java, Scala, and Python. While knowledge of Python and Scala is not compulsory, it will help get an in-depth understanding of Big Data. People with 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 comment, 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 part, we will have a look at two of the famous 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 obtained by anyone, owing to their open-source nature.

Apache Hadoop – It is an open-source big data platform. It is written in Java Programming language but provides support in languages like C++, Ruby, Python, and Java. This technology is the most required after in industries. Hadoop is well-known for its distributed database system called Hadoop Distributed File System. Hadoop consists of MapReduce which is a powerful framework responsible for processing huge volumes of data. Hadoop is also popular for its data locality concept which increases the effectiveness of Hadoop applications. Due to this reason, it is generally preferred by industries and is a must-know tool for Big Data enthusiasts.

Apache Spark – It is another big data tool that is famous for its lightning-fast computational capabilities. Spark is an evolution of Apache Hadoop that allows high-speed streaming of data and quick access to SQL workloads with machine learning capabilities. Spark can run 100 times faster than MapReduce. Due to this reason, it is increasingly becoming famous among industries that are looking for lightning-fast big data platforms.

We saw how Big Data has transformed 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 escapers, start your Big Data learning now.

Let us discover more uses of Big data in the Banking sector.

Let’s hope that Big Data will help the government to get success in their mission to find out black money holders and BIG DATA will do a miracle in “MODIfying the nation”.

Let’s hope that there will be good days in the future……

Let’s discover various applications of big data in different domains.