Executive Summary:
The Ministry of Finance addressed questions regarding the use of AI in income tax returns and its impact on revenue. AI-driven campaigns encourage voluntary tax return updates, leading to increased tax revenue and disclosure of previously unreported foreign assets and income. The Income Tax Department has also generated Annual Information Statements (AIS) for a large number of taxpayers.
Key Points / Main Content:
AI & Tax Revenue:
* AI-enabled processes enhance data accuracy, supporting the selection of cases and communication with taxpayers to promote voluntary compliance.
* Filing of updated Income Tax Returns for Assessment Years 2020-21 to 2024-25 generated over Rs 11,000 Crore in additional tax revenue.
Disclosure of Foreign Assets & Income:
* The NUDGE campaign, launched in November 2024, encourages taxpayers to voluntarily declare foreign income and assets.
* As a result, 24,678 taxpayers reported foreign assets and income in revised ITRs for AY 2024-25.
* 5,483 taxpayers filed belated returns, reporting foreign assets worth Rs. 29,208 crore and foreign income of Rs. 1,089.88 crore.
Annual Information Statement (AIS):
* AIS was generated for 46.7 Crore PANs for transactions of FY 2024-25, and for 45.1 crore taxpayers for transactions pertaining to FY 2023-24.
* The wide scope of transactions covered by AIS results in a higher number of statements compared to actual income tax return filers, as many individuals may not have taxable income above the mandatory filing threshold.
* AIS data helps the Income Tax Department identify non-filers and improve voluntary compliance.
Impact Analysis:
Taxpayers:
* Impact: Taxpayers are encouraged to voluntarily update their income tax returns and accurately report foreign assets and income.
* Action Required: Taxpayers should review their AIS, update their income tax returns if necessary, and accurately report all income, including foreign assets and income.
Income Tax Department:
* Impact: Benefits from improved data accuracy, increased tax revenue, and better identification of non-filers.
* Action Required: Continue using AI tools and data analytics to promote voluntary compliance and ensure fair and effective tax administration.
Key Entities Referenced
Ministry of Finance: A department of the Government of India responsible for financial matters.
Department of Revenue: A department under the Ministry of Finance responsible for taxation matters.
Lok Sabha: The lower house of the Parliament of India.
Artificial Intelligence: Use of AI tools by the Income Tax Department to encourage taxpayers to voluntarily update the tax return.
Income Tax Department: The government agency responsible for administering and collecting income tax in India.
Annual Information Statement (AIS): A statement generated by the Income Tax Department containing details of financial transactions of a taxpayer.
NUDGE NonIntrusive Usage of Data to Guide and Enable Taxpayers Campaign: A campaign launched by the Income Tax Department to improve taxpayers voluntary compliance for declaration of foreign income and assets.
Shri. V K Sreekandan: Member of Lok Sabha who raised the question regarding Income Tax Returns Via AI Tools.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 3622
ANSWERED ON MONDAY, 11th AUGUST,2025/SRAVANA 20,1947 (SAKA)
‘Income Tax Returns Via AI Tools’
3622. Shri. V K Sreekandan:
Will the Minister of FINANCE be pleased to state: -
(a) Whether it is a fact that the Government has been encouraging taxpayers to
voluntarily update the tax return via use of Artificial Intelligence tools;
(b) Whether it is also true that this encouragement has helped the Government to collect
additional tax revenue of Rs. 11,000 Crore in 2024-25;
(c) Whether it is also true that Artificial Intelligence tools also aided the disclosure of
Rs. 29,000 crore previously undisclosed foreign assets and Rs. 1,000 crore foreign
income related to cryptocurrencies or virtual digital assets in 2024-25, if so the
details thereof;
(d) Whether it is also a fact that the Government has generated Annual Information
Statements for about 40 crore unique taxpayers, nine Crore of those actually file
returns; and
(e) If so, the details thereof and the reasons therefor?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) The Income Tax Department has undertaken various e-campaigns to encourage
taxpayers to voluntarily update their Income tax returns. These efforts include, inter
alia, carrying out initial e-verification campaigns. By enhancing data accuracy,
consistency and integrity, AI-enabled processes have been utilised to strengthen the
analytics framework and support the selection of appropriate cases for outreach.This, in turn, facilitates fair, precise, and effective communication with taxpayers,
thereby promoting voluntary compliance and reinforcing transparency in the tax
administration system.
(b) Yes, Filing of Updated Income Tax Returns in respect of Assessment years 2020-21
to 2024-25 has generated additional tax revenue of more than Rs 11,000 Crore.
(c) Using Data Analytics, a NUDGE (Non-Intrusive Usage of Data to Guide and
Enable) Taxpayers Campaign was launched by the Income Tax Department in
November 2024 to improve taxpayers’ voluntary compliance for declaration of
foreign income and assets. Under the campaign, informational messages were sent
via SMS and email to selected resident taxpayers in respect of whom information
has been received under the Automatic Exchange of Information that they are
holding foreign assets and/or having income from foreign sources, to accurately
report foreign assets and report income from foreign sources in their Income Tax
Returns. Total of 24,678 taxpayers reported their foreign assets and income in
revised ITRs for AY 2024-25, while 5,483 taxpayers filed belated returns reporting
foreign assets worth Rs. 29,208 crore and foreign income of Rs. 1,089.88 crore.
(d) to (e) AIS for 46.7 Crore PANs have been generated for transactions of FY 2024-25. For
transactions pertaining to FY 2023-24, AIS was generated for 45.1 crore taxpayers.
The wide net of transactions covered under Annual Information Statements (AIS)
results in a much higher number of statements being generated compared to actual
Income tax return filers. It is pertinent to point out that many individuals, in respect
of whom AIS is generated, may not have the taxable income above the statutory
threshold required for mandatory filing of income tax return. AIS data also helps the
Income Tax Department identify and nudge non-filers and improve voluntary
compliance
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