Income Tax and GST Departments to now use Artificial Intelligence to catch Tax evaders

The Government is using data analytics, big data, and Artificial Intelligence/Machine Learning in tax administration to make it more effective, free of official discretion, and friendlier to businesses and taxpayers. This was mentioned by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Lok Sabha today.

By using big data, data analytics is being used to uncover financial risks, suspicious trends and patterns, and dangerous businesses in Customs and GST, according to the Minister.

INDIRECT TAXES

The Central Board for Indirect Taxes and Customs launched initiative ADVAIT (Advanced Analytics in Indirect Taxes) in 2021 as a flagship analytics initiative for Indirect Taxes. (CBIC). The initiative also makes advantage of big data and artificial intelligence capabilities. According to the Minister, ADVAIT has three goals: boosting indirect tax income, expanding the taxpayer base, and promoting data-driven tax policy.

Further, the Minister stated, ADVAIT provides business outputs in three formats:

• Reports
• Interactive Dashboards
• Analytical Models

According to the Minister, the functionality of each output is specifically designed to aid and assist officers in their day-to-day operations, which range from reporting and assuring tax compliance to detecting tax evasion. The site contains advanced analytical capabilities such as data matching, network analysis, pattern identification, predictive analytics, text mining, forecasting, and policy research.

ADVAIT has been designed and developed in a knowledge-driven data ecosystem using some of the most advanced data warehousing business intelligence solutions, keeping in view the 3 I’s:

• Information
• Insights
• Intelligence

DIRECT TAXES

The Minister stated that the Central Board for Direct Taxes (CBDT) is using techniques as data analytics, big data and Artificial Intelligence/Machine Learning for:

• Identifying cases with High Risk of tax evasion and high likelihood of income addition, for further scrutiny.
• Identifying taxpayers to send reminders for advance tax payments.
• Prompting specific taxpayers about apparent mismatches in ITRs and transactions made, so that taxpayers may revise their returns.
• Using big data techniques for storage and effective search of information by income tax officers.
• Using data analytics over networks of taxpayers visualize the taxpayers relationships and to flag potential high-risk transactions.
• Using data analytics techniques for segmentation of taxpayers to focus campaign on high- risk cases from tax evasion perspective.