Introduction
The Indian government has been leveraging artificial intelligence (AI) to enhance tax compliance and revenue growth. In a recent development, the Income Tax Department has reported a significant increase in tax collections, thanks to the effective use of AI-powered tools. According to Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal, the department’s AI-based analysis has led to over one crore taxpayers voluntarily updating their returns, resulting in an additional ₹11,000 crore in tax collections.
Harnessing AI for Better Tax Compliance
The Income Tax Department has been using AI-powered tools as part of its NUDGE (Non Intrusive Usage of Data to Guide and Enable) framework. This innovative approach involves sending advisory messages or letters to taxpayers, prompting them to revise their returns or confirm their correctness. The AI system assesses taxpayer behavior and identifies potential errors or discrepancies, enabling the department to take proactive measures to ensure compliance.
AI-Powered Insights for Improved Tax Collection
The AI system analyzes transaction patterns and historical data to identify taxpayers who should have filed returns but haven’t. It also scrutinizes existing returns for accuracy and flags habitual defaulters. This data-driven approach has enabled the department to trace and address tax evasion issues related to virtual digital assets (VDAs), resulting in a significant increase in tax collections. In the financial year 2022-23, the government collected Rs 437 crore from VDA-related income.
The Way Forward
The Indian government is committed to ensuring tax compliance in the burgeoning cryptocurrency sector. By harnessing the power of AI and data analytics, the Income Tax Department aims to stay ahead of tax evasion schemes and ensure a fair and transparent tax system. As the department continues to refine its AI-powered tools, taxpayers can expect a more streamlined and efficient tax filing experience.
Conclusion
The successful implementation of AI-powered tools by the Income Tax Department is a testament to the power of technology in enhancing tax compliance and revenue growth. As the government continues to leverage AI and data analytics, taxpayers can expect a more efficient and fair tax system. Whether you’re a seasoned taxpayer or new to the world of cryptocurrency transactions, it’s essential to stay informed about the latest developments in tax compliance. Stay ahead of the curve by clicking here for a deeper insight into the Income Tax Bill, 2025.
Originally published on https://www.taxscan.in/top-stories/ai-prompt-over-1-crore-taxpayers-to-update-returns-yielding-11000-crore-in-additional-tax-cbdt-chairman-1428739
Originally published on https://www.taxscan.in/top-stories/ai-prompt-over-1-crore-taxpayers-to-update-returns-yielding-11000-crore-in-additional-tax-cbdt-chairman-1428739
