Through the use of varied synthetic intelligence (AI) tools, the Income Tax Department has over the last 4 years inspired a couple of crore taxpayers to voluntarily replace tax returns resulting in ₹11,000 crore of additional tax revenue for the federal government, Central Board of Direct Taxes Chairman Ravi Agarwal mentioned in an interview.
Mr. Agarwal added that these tools additionally helped reveal ₹29,000 crore value of beforehand undisclosed overseas belongings and ₹1,000 crore of overseas revenue associated to cryptocurrencies, or digital digital belongings (VDAs), in 2024-25.
“The AI analysis comprises two parts: the AI tool itself, and the database that the tool has to analyse,” Mr. Agarwal defined. “We have engaged vendors for the tools themselves. There are various tools depending on the stage and the platform where the AI is being used. For example, in the Centralized Processing Centre for Income Tax returns in Bengaluru one component of AI is being used.”
He defined that, whereas the tax division generates Annual Information Statements (AIS) for about 40 crore distinctive taxpayers, 9 crore of these truly file returns. The first step for the AI software is to analyse whether or not any of the remaining 31 crore must be submitting returns.
“The second component is people who have filed their return, and whether they have filed the right return or not,” Mr. Agarwal mentioned. “That analysis is also through AI, where you analyse the patterns of past history and find out. And the third is to determine who are the habitual defaulters.”
The Income Tax Department then employs a system known as NUDGE (Non-intrusive Usage of Data to Guide and Enable) to ship letters to taxpayers. On the idea of these letters, the taxpayers both revise or replace their returns or inform the Department that they stand by them.
“As a result of this exercise, in the last 4 years since 2021-22, more than 1 crore updated returns have been filed wherein ₹11,000 crore of additional tax revenues have come in,” Mr. Agarwal mentioned.
Encouraged by this, the I-T Department last 12 months tweaked its guidelines to say that returns might be up to date as much as 4 years later, as a substitute of the sooner two-year restrict.
“The point was that, if the Income Tax Department is flagging the issue, the taxpayers should have an opportunity within the statute wherein they can correct the mistake,” Mr. Agarwal defined.
Apart from the additional overseas belongings value ₹29,000 crore and overseas revenue value greater than ₹1,000 crore associated to VDAs that had been disclosed in up to date returns last 12 months, the Income Tax Department in January to March this 12 months additionally performed the same NUDGE marketing campaign for political donations.
Taxpayers claiming deductions below Section 80GGC of the Income Tax Act, which pertains to political donations, had been ‘nudged’ by SMSs and emails. According to the Department, due care was taken to exclude real donors whose names or particulars appeared in the contribution reviews filed by the political events on the Election Commission web site.
Through this marketing campaign, 6.25 lakh taxpayers obtained ‘nudges’ for the claims they made for the monetary years 2022-23, 2023-24, and 2024-25. Of these, 35,260 taxpayers amended their returns, and ₹404.2 crore of additional tax was paid.
