The Income Tax Department of India has leveraged artificial intelligence (AI) tools to enhance compliance, generating over ₹11,000 crore in additional tax revenues since 2021. CBDT Chairman Ravi Agarwal reports that this initiative prompted over 1 crore taxpayers to file or revise returns, uncovering ₹29,000 crore in undisclosed foreign assets and ₹1,000 crore in income from virtual digital assets (VDAs) for FY2024-25. Utilizing a hybrid AI model, the department evaluates tax patterns and transaction anomalies across platforms, spearheaded by the Centralised Processing Centre in Bengaluru.
The innovative ‘NUDGE’ approach sends intelligent prompts via SMS and email to under-reporters, inviting corrections while maintaining dignity. This strategy expanded the window for tax updates to four years and led to significant behavioral shifts among taxpayers. Notably, the campaign enhanced compliance in political donations and cryptocurrency disclosures. India’s AI-driven tax system is setting a global standard for proactive revenue collection and digital governance in tax administration.
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