Developing digital technologies, including AI and big data, generates new possibilities for improving tax services. However, the value chains emerging in the digital environment are falling out of government control. Digital platforms and instruments are making it possible to build relationships that are not transparent to the tax authorities. A particular difficulty for taxation is increased uncontrolled transactions and intangible assets. The joint consumption society is learning to reduce the taxation base.  

In the new conditions, tax authorities need to have detailed knowledge about the activities of manufacturers and the market behavior of consumers to understand production processes, business modes, the logic of decision-making for promoting goods and providing services to the market and the conditions of initiating intellectual property since all this affects the formation of the tax base.  

The country's tax system is a mirror image of the state economy and society. The tax authorities' competencies, infrastructure, and technologies have turned out to be technologies of triple use, which claim to create appropriate institutions and digital platforms. It has to provide procedures for the optimal redistribution of resources among state authorities, businesses, and consumers. A specialized AI application could change businesses and consumers to stimulate taxation system rules. 

Tax evaders receive notice  

India's income tax department has realized the role of AI in ensuring a promising tax situation in the country. The Income Tax department has reportedly sent notices to several tax evaders after reassessing the returns filed. As per updates, several income tax returns have come under the scanner of the IT department. The deduction has been claimed for donations made to charitable trusts and political parties. 

According to a report published by online media, the case is related to the returns during FY'19. Based on the claims of accountants, the report stated that hundreds of notices were issued to salaried individuals from March 20 to June 10 this year. 

How does the IT department find this? By leveraging AI tools.  

As per the report, the income tax notices were issued to alleged evaders under Sections 138 and 148(A). However, in several cases, only an erroneous deduction has been raised in the notice. As far as others go, a higher sum of donations has been claimed and hence, based on reassessment, the IT department has sent these notices.  

Decreasing tax evasion using AI 

With AI and big data, text authorities can get relevant, comprehensive, timely and reliable information on the state of the political, economic and social situations, realising government strategies, national and federal projects, concepts, and targeted programs. 

Considering users' authority, an appropriate systemization of the incoming information should be ensured. Systemization can be carried out based on specifically developed thematic classifiers. The thematic classifiers include politics, economics, finance, and social and technological issues. 

In monitoring the situation on taxation, users should be provided with various aspects of information such as current situation, relevance, forecast, measures taken and recommendations. 

The decision-making process based on data analysis from various sources must also form aggregated and forecasted information. The organization of information flows and analytical processing can be carried out by a special information and analytical center.  

Conclusion 

Modern AI has its problems and limitations. It can accumulate big data, including unreliable data, learn from retrospective examples, recognize objects and events, and predict a situation's development. However, the current AI cannot plunge into the world fully understand and explain its analytical predictions. Even with generative AI shaping the tech space, it still functions according to the available data fed into the systems. A new paradigm of AI can consider non-formalized cognitive semantics and latent aspects of tax events modelling by using AI and big data arrays.  

Outlook India

Decreasing Tax Evasion by Artificial Intelligence