Finance Ministry could deploy new analytics system to track black money

The finance ministry is looking at putting in place a new analytics system to log large spends and monitor splitting of transactions as it steps up deployment of technology to track black money in the country.
The ministry is likely to soon release a request for proposal or RFQ, the first stage in a tendering process, officials said. Efforts have been on for at least three years to install such an analytics platform.

"The discussion is getting more serious. They understand what they want and are looking at a way to frame it within the RFP process. They have been reconciling data on a piecemeal basis, but putting in the system will automate a lot of the work," a consultant with knowledge of the finance ministry's plan told ET, requesting not to be named.

Executives said the ministry has sounded technology companies about the exercise. The new platform is expected to boost part of the system that the ministry already possesses, they said.

"The department already has a system that logs transactions of Rs 5-10 crore, but the new engine will track spends starting at Rs 50 lakh. And they are looking to see if they can make the flagging a real-time process because currently the data processing in not real-time," said another executive.

The ministry did not respond to an email query till late evening on Thursday.

The platform is also expected to analyse data from both the Central Board of Direct Taxes and the Central Board of Excise and Customs to catch individuals whose expenditure exceeds their declared income.

Finance Minister Arun Jaitley had said in his budget speech for 2015-16 that technology will be used to a greater extent to nab tax-evaders.

"Provision is also being made to tackle splitting of reportable transactions. To improve enforcement CBDT and CBEC will leverage technology and have access to information in each other's database," Jaitley had said.

In November 2014, the Tax Administration Reform Committee issued its third report that also highlighted the need for a greater use of technology. The committee said the implementation of a specialised fraud management tool would help detect and prevent opportunistic and professional fraud. It also recommended the setting up of a Knowledge, Analysis and Intelligence Centre to enable data sharing and analysis between the CBDT and CBEC.

"There are a number of initiatives around (within the ministry) using analytics to identify tax evasion and black money. The government receives information from multiple sources which are currently residing in multiple systems. If all of this information is meaningfully analysed in an integrated manner, significant part of tax evasion can be identified," said Neel Ratan, partner - leader management consulting and government at consultancy PricewaterhouseCoopers.

The Centre is also keenly watching Maharashtra's sales tax department that uses an analytics system to catch traders trying to evade sales tax.