Tax Collections Surge As AI Enhances Compliance And Monitoring

The Income Tax department has issued ₹1.82 trillion in corporate tax refunds so far this year, marking a 70% increase from the previous year. Non-corporate tax refunds totaled ₹1.56 trillion, reflecting a 20% annual rise.

Nominal GDP growth averaged 8.85% in the first two quarters, slightly below the Union Budget’s forecast of 10.5% for the year, according to the statistics ministry’s latest data.

Technology Boosts Tax Efficiency

Experts attribute the rise in tax revenue to improved collection efficiency driven by advanced technology. Amit Maheshwari, tax partner at AKM Global, said AI is playing a crucial role in tax administration, ensuring better compliance and accurate income disclosures, particularly for foreign assets.

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“Tax authorities now use technology to match declared income with data from banks, financial institutions, and property registrars,” Maheshwari explained. The buoyant capital markets in recent years have also led to higher capital gains tax collections.

Enhanced Monitoring Campaign

To further boost compliance, the department launched a new campaign, sending text messages and emails to taxpayers about mismatches between declared income and transaction data. Authorities will also contact individuals involved in high-value transactions who have not filed tax returns. The deadline for filing revised or belated returns for FY24 is December 31, the Central Board of Direct Taxes (CBDT) said.

Securities Transaction Tax Hits Record High

Securities Transaction Tax (STT) collections reached ₹40,114 crore this year, an 85% jump from last year. STT applies to sales and purchases of equities, derivatives, equity-oriented mutual funds, and certain unlisted shares. Rates vary from 0.001% to 0.2% depending on the security type.

Maheshwari noted that higher tax collections provide the government with additional resources for public spending, signaling a positive outlook for economic growth.