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The Central Board of Direct Taxes (CBDT) has adopted an advanced artificial intelligence–driven system to detect gaps in tax filings and strengthen compliance, replacing its earlier manual processes, Chairman Ravi Agrawal announced on Thursday.
Speaking at the opening session of the 22nd All India TDS Conference 2025, Agrawal said AI now plays a central role in reviewing taxpayer data, flagging inconsistencies, and alerting individuals whose reported income or tax payments appear insufficient. The system issues electronic nudges — via email or public notices — urging taxpayers to update filings before enforcement action is considered.
Agrawal highlighted the government’s enhanced use of NUDGE (Non-Intrusive Usage of Data to Guide and Enable Taxpayers) tools to convert data-driven insights into revenue. When discrepancies persist, cases may be scrutinized and escalated for action.
He also noted that the upcoming Income Tax Act 2025, expected to take effect on April 1, 2026, aims to simplify language, improve compliance, and strengthen institutional capacity. National gross tax collection growth has been forecast at 7%, with Madhya Pradesh recording 6.99%.
Day one of the conference focused heavily on Tax Deducted at Source (TDS), a critical pillar of India’s revenue architecture. With 23 lakh deductors accounting for over 50% of total tax collections, officials reviewed compliance challenges — especially under Section 192 relating to salary deductions. Revenue official Pankaj Kumar Mishra emphasized the need for stronger outreach to government agencies, PSUs, and autonomous bodies to curb recurring lapses.
The two-day conference is centered on the theme “Turning Data Into Revenue With AI,” reflecting India’s accelerating push toward data-backed tax administration.
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