CBDT using AI tools to boost income-tax compliance, says Chairman Agrawal
New Delhi, Jul 24, 2025
Speaking on using artificial intelligence to monitor taxpayer behaviour, CBDT Chairman Ravi Agrawal stated that the department's role remains facilitative and non-intrusive
The Income Tax Department is now employing artificial intelligence (AI) to monitor taxpayer behaviour by tracking 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 said in an interview to The Indian Express.
The objective is to gradually build a comprehensive, 360-degree view of taxpayers' financial activities and detect patterns and inconsistencies in tax return filings, Agrawal said. The initiative aims to identify behavioural trends among taxpayers, he added.
AI flags cases where 'harder nudge' needed
Agrawal said that AI tools are being used to raise “red flags” in cases involving high-value transactions where tax returns are either not filed or consistently filed incorrectly. This could lead the CBDT to assess whether a “harder nudge” is needed, he stated.
The I-T Department has been actively sharing financial transaction data with taxpayers to promote voluntary compliance. Since the launch of this initiative on April 1, 2022, over 11 million updated returns have been filed, leading to an additional tax mop-up of ₹11,000 crore, he said.
Nudge campaign yields ₹409.5 crore in additional taxes
A recent nudge campaign led to the withdrawal of tax deduction claims amounting to ₹963 crore and an additional ₹409.50 crore paid in taxes between April 1, 2023 and June 18, 2025. This was the result of analytics, said Agrawal.
Access to digital records limited to search and seizure cases
Addressing concerns about the department’s access to digital records, Agrawal clarified that such access is limited strictly to search and seizure cases where taxpayers are unwilling to share data. Agrawal said that the next phase of AI usage would be more intense, with reporting agencies providing more mature data for carrying out detailed analytics to identify evaders and hit the right targets.
Agrawal emphasised that the department’s role remains facilitative and non-intrusive, though it continues to monitor compliance closely. He added that a similar campaign using updated data sets is planned for later this year.
[The Business Standard]
