Now, the behaviour of the taxpayer can be tracked by the income tax department with its new system employing artificial intelligence (AI) that monitors online portal visits, flagging high-value transactions, and filtering out Permanent Account Numbers (PANs) linked to suspicious claims, Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal cited.
The goal is to build a complete, 360-degree view of taxpayers’ financial activities and fetch patterns and inconsistencies in tax return filings, Agrawal expressed. The initiative strives to identify behavioural trends among taxpayers.
AI Identifies Cases Requiring Stronger Compliance Measures
AI tools are used to raise red flags for cases that comprise high-value transactions where the tax returns are either not filed or consistently filed incorrectly. The same can be directed to the CBDT to compute whether a harder nudge is required, he mentioned.
To promote compliance, the IT department is sharing financial transaction data with taxpayers. Over 11 million updated returns have been filed since the launch of the same initiative on April 1, 2022, which leads to an additional tax mop-up of Rs 11000 crore.
Nudge Campaign Results in ₹409.5 Crore in Additional Tax Collection
A recent nudge campaign directed to a withdrawal of tax deduction claims of ₹963 crore and an additional ₹409.50 crore paid in taxes between April 1, 2023, and June 18, 2025. It is because of analytics.
Access to Digital Records is Restricted to Search and Seizure Cases
Agrawal, while addressing the concerns for access to digital records of the department, mentioned that this access is bound to an investigation where the taxpayers want to share data. As per him, the upcoming AI phase will be stronger with the reporting agencies furnishing mature data to perform analytics to find the evaders and hit the correct targets.
Read Also: CBDT Using AI to Catch Taxpayers Who Wrongfully Claim Deductions on Rent & Loans
Facilitative and non-intrusive will be the department’s forever role, but it tracks compliance. With the use of the updated data, a similar campaign set is planned for later this year.
