The amount of data flow per day across the globe is a mind-boggling amount, we create 2.5 quintillion bytes of data each day. With the emergence of new technologies, this volume of data increases day by day. These data come from a variety of sources like mobile phones, barcode scans, digital platforms, wireless scanners, etc. Data storage and organization also became easier throughout the flow. Evidently, we can use this data in the tax ecosystem if we can regularize and structure the data by the use of analytics. This may lead to a faster and more optimized way of tax management.
This means the tax payer’s data is flowing between the tax administration and the businesses. This data is being analyzed and used in new and more expansive ways. The Goods and Services Tax (GST) reporting requirements mandate increased data collection and disclosure. Data analytics unit is an easy set to use data in a useful way for the state governments. By identifying non-compliance and evasion, the tax authorities will benefit by institutionalizing analytics by developing a single view of the taxpayer by creating an integrated information and communications technology (ICT) infrastructure that combines, transforms and consolidates data from a wide range of sources. This should be made possible by sharing the pool of resources between the state and central government. A protocol must be made to ensure this. Also on the standard level, data analytics for tax management should be included in the curriculum of the tax officers.
The new policy regarding GST has paved the way for collecting the granular data which opens to new ways of using data analytics for policymaking. The data is contained in various forms such as registration application which had 1.4 crores data and returns, challans and E-way bills had a share of 16 crores, 5.34 crores and 5.5 crores respectively. There are many areas where policymaking can be benefitted from this data such as consumption pattern, Truckers’ market place, Market place for registered taxpayers, Credit rating of micro and small enterprises, Lending to micro and small enterprises.
With all this data used for the tax ecosystem, tax evasion also becomes a major issue. In the year 2017 – 2018, the Indian government has detected a GST tax evasion which totals an amount of INR3,026 crores. But, evidently data analytics is playing a critical role in many domains in the government such as risk case selection where data is used for predictive analysis and pattern recognition, improving filling rate and debt management by prescriptive analysis, better taxpayer services such as proactive messaging and grievance addressing and finally in policy evaluation which can evaluate the impact of changes in policy.
In this huge wave of globalization and digitalization, where many corporations are sitting above a huge pile of data, structuring this data in a useful way by analytics can lead to tremendous value addition and optimize taxes in the tax ecosystem.