How analytics helped the Maharashtra Sales Tax Department boost revenue collection

Data analytics

BI and data warehousing solution led MSTD toward better financial forecasting and better ability to detect frauds

Tax evaders find various means to avoid paying governments their due—under reporting incomes or sales, overstating deductions, exemptions, or credits. This results in an adverse impact on the public services that citizens are entitled to. No other department is more aware of its repercussions than Maharashtra Sales Tax Department (MSTD). In a bid to plug such revenue leakages, sought to arrest evasion, whilst expanding its taxpayer base of 7,75,000 dealers, the department turned to BI and data warehousing solution. With 12,000 personnel, MSTD contributes a staggering two-thirds of the state’s revenue through Sales Tax and Value Added Taxes (VAT).

The tax agency wanted to step up efforts to boost revenue collection. A revenue forecast model was conceptualized to set targets. However, the agency lacked appropriate tools to create accurate forecasting inputs and perform advanced analysis. Existing processes required streamlining through business process analytics to break the silos. Retrieving relevant analytics from vast chunks of data and gathering a consolidated view of its collections and operations was one of the biggest roadblock.
To meet the above challenges, a robust and scalable technology foundation, comprising data integration and advanced business analysis, was envisaged. A business intelligence and data warehousing solution was seen by MSTD as the ideal means to create such a foundation.

MSTD selected Capgemini as a technology partner to overcome those challenges. Capgemini’s Tax and Welfare team supports agencies across the world to accomplish a digital transformation that prepares them to detect and rapidly combat tax evasion and deter non-compliance. Capgemini implemented an end-to-end business intelligence, data warehousing, and reporting solution from scratch, including installation of hardware, software, solution definition, and support. Capgemini team defined comprehensive solution architecture for MSTD using SAS Enterprise Data Integration Studio, SAS Enterprise Miner, and SAS/ETS, SAS Enterprise BI Studio, powered by HP hardware. Comprising 1,000 database tables, over 600 ETL Jobs, 350 reports, and 30 dashboards, the solution integrates data extraction, storage, data mining, data analysis, and reporting tools. It automates the process of building sophisticated predictive models and enables detection of fraud through circular trading and predictive analysis.  The project got implemented in a time span of 25 months.
MSTD rides on profit waves with the implementation

Capgemini’s successful collaboration with MSTD resulted in a sophisticated data warehousing solution that enabled the MSTD to spot potentially fraudulent claims and expand its taxpayer base. The solution closes the gap between revenue owed and collected and detects erroneous patterns of financial reporting. Predictive analytics helps gather intelligence from different channels to incorporate the right inputs into the forecasting models.

Vinay Kargaonkar, IPS, Special Inspector General of Police and Chief Vigilance Officer, Maharashtra Sales Tax Department, said: “This initiative has brought a revolutionary change in the way we make decisions everyday- moving away from a person to a system based decision making. The CDA implementation also proved instrumental in controlling tax evasion.”The project is unique and first-of-its-kind in India. Capgemini also implemented the Computerized Desk Audit (CDA) for MSTD to calculate the tax liability of dealers on the basis of 11 parameters.

The CDA implementation performed by Capgemini helped MSTD accrue numerous benefits, including improved service delivery by actualizing Anywhere Anytime services for Website compliance, enabling improved dealer satisfaction due to easily available information, and bringing Government services closer to the doorsteps of citizens. Moreover, with CDA compliance, the dealers were spared the effort of attending before an audit officer. Involving dealers in the audit process upfront via CDA provided MSTD with an opportunity to respond to their tax liabilities. In addition, the decreased cost of compliance and reduced response and resolution time helped MSTD save time and cost incurred by dealers. CDA was run on all dealers, enabling MSTD to additional tax revenue of more than INR 165 Cr till now from the date of implementation.

The CDA implementation also freed human resources for 11 months from Business Audit work for additional tax cases, resulting in financial savings. MSTD is now well-equipped to collate data from various external agencies across Maharashtra, as well as the Indian Government, to identify tax evasion and stop revenue leakages. Additionally, robust reporting ensures MSTD has real-time access to accurate data at the right place and right time, replacing the manual processes. The project has achieved such unprecedented success that it is already being recognized with prestigious awards from industry bodies.

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Kalyan Banga224 Posts

I am Kalyan Banga, a Post Graduate in Business Analytics from Indian Institute of Management (IIM) Calcutta, a premier management institute, ranked best B-School in Asia in FT Masters management global rankings. I have spent 14 years in field of Research & Analytics.


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