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Let’s Dive: How does India obtain data for tax collection?

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Tax authorities around the world are increasingly relying on digital means to acquire taxpayer data and manage their #taxsystems, owing to revenue pressures and declining headcounts.

In response to the growing demand for tax transparency from states and international bodies, many tax authorities are developing data collection platforms that allow for the matching and exchange of taxpayer data.

The data roll for tax collection

The IT systems directorate of the #Income Tax Department is based in New Delhi and employs approximately 100 software experts. They collect data, compute it, look for patterns, and then analyze the results to detect tax fraud.

The department employs a mix of data from various sources, including direct and indirect taxes, motor vehicle registration, passports, import and export data, SEBI data, stock exchange data, investment data, and many others.

The scope circle

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The department’s stated goal is to broaden the tax base in order to generate more revenue relative to #GDP. Most Indians currently file tax returns, and only a few lakh people declare an annual income of more than ten lakh rupees, which explains why tax collections are so low in comparison to GDP.

India’s Income Tax Department

India’s ITD is a knowledge gold mine. Individuals and businesses both file tax returns. Furthermore, information is obtained from outside sources such as banks, credit card companies, real estate registrars, tax deduction forms at the source, and so on.

Each financial transaction associated with the tax department’s Permanent Account Number, or PAN, enables sophisticated data analysis. Other government entities that provide data include the Goods and Services Tax, GSTN, the Ministry of Corporate Affairs, and #SEBI.

Machine learning algorithms improve with increased data mining, making it easier to access a single base of indirect and direct tax efficiencies and closing loopholes in tax avoidance.

what was the use of money collected from taxes

This topic recorded the taxes and mandatory contributions that a medium-size company must have paid or withheld in a given year, as well as the administrative burden of paying taxes and contributions. The most recent round of data collection for the project was completed on May 1, 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). 

Income tax department headquarters

Income Tax Offices locator

How to complaint income tax department about black money

CBDT will now let you register complaints of tax evasion, black money and benami properties online

why does the government collect taxes

Direct taxation and indirect taxation are used to collect money from individuals and corporations for the government to use to fund social projects. The government’s revenue comes from these two tax collections.



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