Big Data Hunt from Social Media Profiles to Identify Potential Taxpayers – Is it Privacy Breach?

Article by Dinesh Jotwani
Advocate, Supreme Court Of India

From problems with security and data breaches, to serious consequences from users oversharing on social platforms, the relationship between privacy and social media can be strained – at best. A photo of your shiny new luxury car on Instagram or a costly watch on Facebook may lead the taxman to your door as the tax department is snooping social media in order to trace tax evasions.

With people putting more and more of their lives online, privacy on social media is a main concern for many going forward. Not only it can hinder your privacy, but it is also a threat to confidentiality. Do you know that the posts which you are sharing on your social account are monitored by someone out there?  Companies take advantage of the vast quantities of data generated on social media. Likewise, the income tax department has been coming up with new ways to identify evaders. The department then sought to revamp its data collection methods with the help of its data sources on social media, where it will flag a mismatch between an individual’s income and social media posts.

Fraud taxpayers are under observation

There has always been a section of people in India that has not paid the right amount of tax corresponding to income. The government wants to use technology appropriately to be able to identify such people. Along with that after number of massive frauds by prominent Indian businessmen, the IT department perhaps expects to prevent such occurrences in the future by monitoring what people post online.

Caution! IT department has an eye on you

It’s common that people flaunt vacations, cars and homes on the social media but if in case these don’t match your tax return, your zone can be flagged. But social media posts won’t be taken as the only evidence to launch a scrutiny, they would just be a base to start the investigation. If you put something on your public profile, it is in the public domain and can be collected as evidence and wouldn’t be a privacy breach.

Taxmen interested in social media. But Why?

People use social media to share every minute detail of their life. Whether they buy a new car or purchased new house or go out for a vacation, these photos are shared on their social accounts in no time. Sharing such public rant online may lead you in trouble as such activities can prove to be an upper hand for the IT department and allows them to identify those who may be evading tax or paying less tax than they should.

Project Insight

The use of online posts to identify tax evaders is called Project Insight. This programme of worth Rs 1000 crore launched by the government would track social networking profiles of people and keep a tab on the expenditure patterns through the photographs and videos uploaded on social media. If the purchases and travel expenses are found to be disproportionate to the declared income of a person, the I-T officials would be informed of the mismatch and actions would follow.

People use social media because it helps in exchange of ideas and keeps the flow of communication maintained. But doesn’t mean that they want their posts to be monitored by the authorities. Those who comply with paying income tax certainly don’t want to answer regarding how they spend their income. They also don’t want the taxman to intrude in their personal life. Here the efficacy of this method also comes under a big question. It may simply prompt those who evade taxes to not post photos of expensive overseas vacations and extravagant purchases.

The IT department keeps a tab on paramount and luxurious purchases by individuals which are present as an evidence on their social media accounts in the form of images, text or videos. In case of a discrepancy, the IT department expects to pursue the case further.

What does the law say?

The Information Technology Act 2000 states that any step taken by the government to gather personal information online is prohibited and falls under the purview of breach of privacy. More importantly these evidences about the online purchases made by an individual will not be admissible in court.

The Income Tax Department has many other means to take actions against the tax evaders. Other than snooping social media accounts they also have access to individual’s bank accounts, PAN numbers, and data with the Reserve Bank of India. Though the act of monitoring the social media accounts of taxpayers is breach of privacy but the IT department finds it as the need of an hour to subvert the usage of black money.