Expect Delays in Income Tax Refund this Year Due to New System of AI Scrutiny

Despite correctly filing your income tax returns or ITR for the current assessment year, your tax refund may be delayed.

This year, taxpayers should expect delays in their income tax refunds. The government has launched a severe new method for reviewing income tax returns (ITRs) that employs a specifically created, self-automated artificial intelligence (AI) software program.

Advanced AI for Thorough Examination

The new artificial intelligence system is intended to rigorously verify the accuracy of the information contained in your ITR. Here’s a thorough explanation of how the system works.

Data Collection and Cross-Referencing

The AI will initially collect all information related to your PAN card. It will then cross-reference this data with information from your Aadhaar card. The artificial intelligence (AI) will then reconcile transactions linked to both your PAN and Aadhaar with the bank accounts you’ve specified.

Detailed Financial Analysis

The program will collect information about your fixed deposits, quarterly interest credits, share dividends, share transactions, and long-term and short-term gains from mutual funds and stocks. It will then check for unreported bank accounts in your name, including joint accounts in which you are designated as a second or third holder. Furthermore, the AI will look for postal accounts, cooperative bank accounts, local credit institutions, and different postal savings plans, both individual and joint, particularly those involving family members who are not registered ITR filers.

Verification of Property and Transaction

The AI will compare your PAN card to government record offices to detect any land and immovable property transactions in the last three years. It will also check your debit and credit card transactions, passport and visa information, and the buying or selling history of your vehicle.

Comparison with Data Filed

All obtained data will be rigorously compared to the information you provided in your ITR. This involves cross-checking with the TDS data on Form 26AS. If there are any disparities between reported and undeclared income, the computer will automatically calculate the difference and issue a demand notice under Section 143(1).

Implementation and Effect on Refunds

This AI-ITR program has been successfully completed and tested, and it will be deployed for the first time this year. Due to the comprehensive nature of this new system, ITR processing will be delayed. All returns are expected to be processed by the end of July, or no later than the first week of August.

Advice for Taxpayers

Given the extensive scrutiny, people who have not yet submitted their ITR must ensure that all information is true and full. In short, while the new AI system promises to increase the accuracy and fairness of tax assessments, it will cause some processing delays for refunds. To minimize problems, taxpayers should exercise patience and ensure that their filings are accurate.