Project Insight: Tax Dept Surveillance Plan is a bit... Hydra-ish?

From 1 April, I-T department will profile taxpayers including social media posts and compare this to tax returns.

6 min read
Project Insight: Tax Dept Surveillance Plan is a bit... Hydra-ish?

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What fresh new thing are you trying to overhype and scare people about now?

Project Insight, the income tax department’s new initiative which will be going live on 1 April.

Wait, why does that sound familiar?

Unless you’re an accountant or one of those people who’s really into tax law – hey, everyone has their kinks – it probably sounds familiar because it was the basis for the climactic bust-up in Captain America: The Winter Soldier.

But wasn’t that...?


And didn’t they...?


And now the income tax department...?

Oh yeah.

I’m assuming the I-T guys aren’t planning for it to end the same way, right?

Probably not.

Project Insight comes crashing down in Captain America: The Winter Soldier.
(GIF courtesy Giphy)

Now let me get this straight.

In 2014, the movie Captain America 2 was about how an evil supervillain organisation, Hydra, took control of a government organisation, S.H.I.E.L.D., and created a surveillance programme called Project Insight that tracked people based on tech-based profiling, with the intent of removing anyone who was a threat to them, right?


And now, in 2019, India’s income tax department is planning to roll out its own Project Insight?


That’s a poor choice of a name, but surely that’s just a coincidence. I mean, it’s not as though the income tax department’s Project Insight is going to be anything like Hydra’s, right?


Dr Evil is totally on board with all this.
(GIF courtesy Giphy)

Oh come on! What possible similarities could there be between Hydra’s villainous plan and the tax department’s?

Well, the tax department’s version is also a surveillance programme, so there is that. Sure, they haven’t got some evil scientist to create an algorithm that profiles everyone based on their bank records, voting patterns and test scores.

But they have got the next best thing, which is big data and a machine learning tool to construct 360-degree profiles of taxpayers, including “transactions, relationships, social networking and other related information” (according to Business Standard).

(You can read more about Project Insight in Business Standard’s recent report on the rollout of the intiative here and what the income tax department wants to do with it here.)

Look, nothing surprises me anymore, but I’m reasonably certain the end goal isn’t to launch three super-advanced helicarriers into the skies to shoot and kill the income tax department’s enemies.

Ok fine, there are no helicarriers of doom. The information collected through Project Insight will be used to identify tax evaders and get them to cough up what they’re supposed to pay.

Which is a perfectly legitimate purpose, of course, given how a very small fraction of people pay any direct taxes, and even they try to find every possible loophole to avoid doing so.

What’s murky about this whole thing is the method that the tax department is going to employ.

There is no detailed public statement on what kind of data will be collected, with the tax department just throwing lots of jargon around. Luckily, news reports from 2017 (when some aspects of the programme were rolled out) and this last week have given us some more details. In addition to traditionally used information from tax returns and banks, the tax department will also be looking at social media and other third party reporting.


Wait, they’re going to be snooping around my Instagram account to see if I’ve been evading taxes? What’s the connection!

Well, there is a logic to the move. Everyone loves showing off on Facebook, Twitter and especially Instagram, and our compulsive oversharing means social media profiles are teeming with details of our holidays, or the fancy things we’ve blown up our money on. Using the Project Insight tool developed by L&T Infotech, the taxman can check and see if people’s tax returns match up to their spending patterns, and investigate cases where things don’t add up.

You’ll have to avoid fancy cars and exotic locales on your Instagram feed.
(GIF courtesy Giphy)

Woah, that’s actually quite clever, isn’t it?

But isn’t this a bit intrusive? Wouldn’t such a move violate our right to privacy?

That’s the big question. The programme started up around 2010, and its initial rollout was in 2017, before the Supreme Court’s landmark judgment on privacy as a fundamental right. While privacy was a fundamental right before that as well, let’s just say that governments have treated the concept of privacy in a cavalier fashion, as Aadhaar under the UPA and the NDA shows us.

Speaking of which, PAN-Aadhaar linking was supposed to be something Project Insight would leverage, according to reports in 2017 (see the Mint article linked earlier), which is funny since the government insisted in court that Aadhaar wouldn’t be used for surveillance and profiling.

Coming back to Project Insight and privacy, yes, there are some concerns about how the tax department will be conducting its profiling, especially since we still don’t have a data protection law, which means there are no adequate safeguards for the data collected.

The OECD has pointed out that tech solutions for combating tax evasion can be a “win-win”, but notes that these have to be coupled with legislative measures and taxpayer consultation – neither of which were done for Project Insight.

(You can read the OECD report on ‘Technology Tools to Tackle Tax Evasion and Tax Fraud here.)


Are there any other countries doing anything like this then? And how have they fixed the privacy issues?

Belgium, Canada and Australia are also using big data analytics to combat tax evasion. Project Insight is supposed to be based on the UK HMRC’s ‘Connect’ programme, which has reportedly saved the UK billions of pounds in revenue, and helped increase criminal prosecutions by 600 percent.

Of course, ‘Connect’ has also run into some privacy problems, with the Electronic Money Association, which represents companies like Paypal and Airbnb warning that there are insufficient safeguards to the way the HMRC is using the data it collects.

And that’s in a country which does have strict data protection laws, so what’s going to be done with the data collected by the income tax department here is anybody’s guess.

(You can read about what UK’s ‘Connect’ tracks here.)

I’ve not heard anyone kicking up a fuss over this, so I take it nothing is going to happen and Project Insight will roll along happily. When is it being fully implemented?

From 1 April onwards – no, that’s not an April Fools’ joke – the full programme (voluntary reporting + profiling) will track information from financial year 2019-20 onwards.

On 15 March, the I-T department started training its officers to use the reporting portal that’s part of Project Insight. There are no cases filed in the courts against it, and let’s face it, even if they were, the government won’t back down on this, not after reportedly spending in the range of $156 million dollars on the whole thing.

So I guess I’ll just have to tone down my social media posts: not take selfies with luxury goods which I don’t own, and stop putting up photos in exotic locales with pretentious captions?

Something tells me this may not be the worst thing that could happen.

Ah well. Hail Hydra?

Hail Hydra.

Income tax department officials’ new greeting.
(GIF courtesy Giphy)

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Topics:  Social Media   Privacy   Income Tax 

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