Income Tax dept is watching: Your clicks, your claims, your fake email, nothing’s off-limits

Tracking your clicks, checking your claims, and flagging your deductions — the Income Tax Department is using artificial intelligence to quietly build full profiles of taxpayers, and it’s already uncovering widespread errors, underreporting, and possibly fraud.

From monitoring how often users check their Annual Information Statement (AIS) online to identifying high-value transactions without matching tax returns, the department is deploying AI to spot patterns — and intervene.

“On average, taxpayers visited about 3.5 times to see their AIS. That’s 24 crore visits overall,” Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal was quoted as saying in an Indian Express interview. “It becomes a reference point to decide what tax is to be paid.”

The tech-powered analysis is revealing a gap: 40 crore AIS statements were generated last year, but only 9 crore returns were filed. The department believes many potential filers are stopping short or being misled. A major AI-led discovery involved ₹9,000 crore in excess deductions claimed under Section 80GGC.

On July 14, the department launched a verification sweep across 150 cities, zeroing in on over 1.5 lakh PANs linked to suspicious deduction and exemption claims. “These actions are not against taxpayers, but intermediaries or facilitators — professionals misguiding filers,” Agrawal said.

AI is also being used to detect repetitive filing errors, prompting graded responses: guidance, nudges, and if necessary, stricter action. One example: of 19,501 taxpayers nudged over foreign asset disclosures, 62% revised their returns. That led to declarations of ₹29,208 crore in foreign assets and ₹1,089 crore in income.

The department says it has collected ₹9,577 crore in additional taxes from 89 lakh updated returns filed as of June 18, 2025. A targeted SMS/email campaign alone helped recover ₹409.5 crore.

But AI’s reach is hampered by a basic glitch: faulty contact data. “Many taxpayers register emails or numbers of intermediaries,” said Agrawal. “Without correct contact details, even nudging becomes difficult.”

The goal, he emphasized, isn’t enforcement alone. “We trust taxpayers — but incorrect claims are not acceptable.”