April 19, 2023 Tata Infotech Ltd. Proprietary
Decision Support System & Data
Mining Methodologies
FTA ConferenceAtar Singh Tomar
Tata Infotech Ltd. Proprietary 2
Outline
Why a Tax Decision Support System (DSS)?Why a Tax Decision Support System (DSS)?
Tax DSS ArchitectureTax DSS Architecture
Tax DSS Methodology Tax DSS Methodology
Tax Decision Support SystemTax Decision Support System
Business BenefitsBusiness Benefits
Concluding ThoughtsConcluding Thoughts
Q & A SessionQ & A Session
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Mainframes OperationalSystems
Online AnalyticalSystems
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ACTION
WHY
WHAT
PredictionForecastBusiness
Need
Complexity
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Readily access and analyze the tax information
Effectively and accurately identify the area of non-
compliance
Better understand the taxpayers
Formulate better legislative policies
Achieve higher degree of accuracy in revenue forecast
Optimize the operational cost
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by Business Typeby Tax Typeby Tax Periodby Locationby its distribution across the various income groups of the taxpayers
Compare the revenue collected and balance due for the past 5 years
Evaluate the effectiveness of audit programs in identifying non-filers and under reporters
Trends in the collected and due amounts in the various Payment Plans at various stages and defaulters
Evaluate the productivity of various departments in handling cases over the years
Evaluate the effectiveness of external data in identifying non-filers by showing the number of such taxpayers
by the payment plan typeby the tax periodby the income groupby the tax type
by tax periodby locationby business type
by tax periodby locationby business type
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Designed for real-time data entry and editing
Data maintained is constantly changing
Limited historical data is available for on-line comparisons
Running Decision Support queries degrades the performance
of the Transactional Application
Difficulty in making ad-hoc queries
Complexity in achieving Comparisons, Aggregations,
Rankings, Running totals etc.
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Decision Support System is a computer based information system designed to facilitate the decision making process of semi structured tasks
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Tax Compliance
Data Mart
Metadata Repository
Tax DataWarehouse
Data Warehouse
Data Extraction,Scrubbing
andTransformation
OLAP toolsEISQuery & ReportingStatistical AnalysisData Mining
LANWANInternet
Meta Cube
Internal Data
Sources
External Data Sources
External Sources
Indv. / Corp.Tax App.
Un-employment Tax App.
WithholdingTax App.
A/RSystem
“A Data Warehouse is a subject-oriented, integrated, time variant and non-volatile
collection of data in support of management’s decision-making process.”
A Data-Mart contains a subset of the dataavailable in an enterprise-wide data warehouse.
Data Mining is Discovering meaningful new correlations, Patterns and trends Using Pattern recognition technologies, Statistical and mathematical techniques
State’s Legacy and Transactional application
IRS’s different tapes IMF IRTF BMF BRTFOther State Agency's Payroll System Transportation System General Services
On-Line Analytical Processing (OLAP)Is a process to assist decision making by using tools to facilitate the analysis
of multi-dimensionally structured business information.
East West North
2Q971Q97
4Q963Q96
2Q96
Income
Withholding
Insurance
Meta Cube
Collected Tax Revenue• North• Withholding• 1Q97
Source Data Validation
Data Scrubbing
Data Migration
Data Transformation
Data Warehouse
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Decision Support Analysis
DSS Software Evaluation & Selection
Operational Deployment and Support
Prototype Development
Rev
isio
n &
En
han
cem
ents
Scoping of Prototype
Project Evaluation Criteria
Detailed Design
System Construction
Testing
Demonstration
Evaluation
Functional Orientation
Operational Training
Deployment
Maintenance
Structured Interviews
Decision Analysis
Data Analysis
Technical Analysis
Conceptual DSS Orientation
Plans & Prioritization
Ad
apta
tion
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Taxpayer ProfilingTaxpayer Profiling Tax CollectionTax Collection Fraud Detection & Tax Non-complianceFraud Detection & Tax Non-compliance Legislative Change ImpactLegislative Change Impact Revenue ForecastingRevenue Forecasting
These Subject Areas can be viewed w.r.t to various common perspectives Business Type Location (States, City) Taxpayer (Demographic) Tax Type Tax Period (Year, Quarter, Months) Time (Year, Months, Events, Seasons)
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Provides comprehensive taxpayer informationProvides comprehensive taxpayer information
Identification of potential fraudulent taxpayersIdentification of potential fraudulent taxpayers
Compliant taxpayer can be relaxed from Compliant taxpayer can be relaxed from cumbersome audit processcumbersome audit process
Provide better taxpayer servicesProvide better taxpayer services
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Analyze the trends in tax revenue for revenue enhancementEvaluate uncollected tax revenue
Reallocate resources to value added programs
Enhance A/R management
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Maximize the non-compliance discoveries
Analyze trends and patterns of targeted groups of taxpayers Rank potential audit suspects by evaluating
their revenue potentialFocus on collection and compliance efforts
Substantial increase in tax assessments and long term reduction in tax gap
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Leverage the accuracy, efficiency,and productivity of non-compliance programs
Provide an alert mechanism to trap non-filers before expiry of the statute limit
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Estimate fiscal and administrative impacts of
proposed legislative changes
Support users in formulating tax policy
Analyze the revenue effect of proposed and
enacted legislative changes
Determine the effects of changes in legislation, policies and regulations
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Ability to formulate reasonable fiscal policies
Incorporate the historical revenue trends and other governing estimate
variables
Provide the highest degree of accuracy in revenue forecasting
Use of econometric models to improve the accuracy of forecasts
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Tangible BenefitsTangible Benefits Improvement in non-compliance will increase tax revenue More cost effective decisions are enabled Better business intelligence is enabled Enhanced taxpayer Services
Intangible BenefitsIntangible Benefits Improved productivity Reduced redundant processing and support Ability to focus on business processes through complete analysis
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Tax DSS holds great potential for dramatic business benefitsTax DSS holds great potential for dramatic business benefits
Capitalizes on the potential value of the organization’s informationCapitalizes on the potential value of the organization’s information
Provide decision makers access to consistent, reliable and timely dataProvide decision makers access to consistent, reliable and timely data
Still much more to explore and enhanceStill much more to explore and enhance
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Large poolof resources
Expertise in theArea
Superior Solution
Tax DSS Methodology
Understand DSS Technology
Make Things Happen