L&T Infotech's $100 million government contract to catch tax evaders

02 Oct 2017 | By Anish Chakraborty
L&T Infotech bags government's "high volume digital deal"

The Centre's contract, to track social media accounts of taxpayers to see if their spending patterns are in accordance with their tax declarations in order to nab the tax evaders, was awarded to India's largest engineering conglomerate Larsen & Toubro Ltd-owned L&T Infotech Ltd.

A company official has now informed that the contract is a whopping $100 million worth project.

Here's more.

In context: L&T Infotech bags government's "high volume digital deal"

02 Oct 2017L&T Infotech's $100 million government contract to catch tax evaders

Project InsightWhat is it all about?

The Finance Ministry's Project Insight, in line with UK's 'Connect', was conceptualized at least seven years ago and has cost roughly Rs. 1,000cr. It planned to exploit technology to widen the tax base and curb down on tax evaders.

Last July, the government signed a deal with L&T Infotech Ltd for its three-phase implementation, which was expected to start from May'17.

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Will this system work?

ConnectWill this system work?

Countries like Belgium, Canada, and Australia already make use of big data to nab tax evaders.

The very same 'Connect,' which the Indian initiative is based on, has prevented the British exchequer from suffering a loss of 4.1 billion pounds in revenue since its inception in 2010, according to the statement provided in the December 2016 report by London-based Institute of Financial Accountants.

L&TWhat role will L&T play?

Insight is expected to help bridge the gap by automating most of the processes and cutting the downtime, needed for resolution of tax evasion cases.

For L&T, it's a long-term project, although no timeframe has been specified yet. It'll work on a build-own-operate-transfer model, meaning it'll build and run the project during the contract period and then transfer the system to the government.

PhasesIt will be completed in three phases

In the first phase, all data will be migrated to a new system. There will be no physical interaction, only virtual/postal communication.

Compliance is expected to rise 30-40%. In the second phase, likely by December, the information will be cleaned and processed. Individual spending profiles will be made. In the last phase, future defaults will be predicted and risks will be flagged.

DealCreating a semantic web

L&T Infotech MD Sanjay Jalona informed that the center's requirement involves advanced analytics. "Now, that is like a $100-million deal for us," he said.

Calling the CBDT contract a "high volume digital deal," Jalona also informed that the firm is creating a 'semantic web,' where web pages will get stacked and tagged in a specified way, which will enable computers to read them directly.

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Tax evasionHow does it nab tax evaders?

Elucidating it further Jalona said, "We are creating a systematic web on a person. If his wife is going to the Seychelles and putting photos on Instagram, we will capture it ... that is really advanced analytics."

Along with the CBDT project, the firm said that it's also pursuing high-value deals, such as digitizing its parent firm's vertical "at the core".