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AI-enabled Taxman

Mains -GS3- Economic Development

1. Delhi government has decided to use Artificial Intelligence (AI) to detect tax evaders and identify bogus firms.

2. The state exchequer is expected to gain by plugging leaks.

3. AI is regarded as a solution to problems that involve a haul of raw data which is otherwise not easy to analyze.

Potential of AI

1. AI could possibly scan lots of data, spot patterns and even join the dots to highlight suspicious cases.

2. Some Nordic countries have already deployed AI as a tool to check tax evasion and have shown great results.

3. For instance, in Denmark, AI tools have flagged 85 of every 100 cases, with 65 of them found to outright tax frauds.

4. Since then, various governments have been exploring the potential of AI to curb tax evasion.

5. In India, taxation is moving along an automation path with the Union government have promised “faceless" tax assessments, designed to ensure transparent taxation system.

6. So, the use of AI could take arbitrary notices out of the equation entirely. But the software would need a lot of programming, given the complexity of our tax system.

7. If done poorly, it could end up with a problem of false alarms. If done well, it could open up a new era in the Indian taxation system.

Source: Live Mint