The government is using data analytics, big data and Artificial Intelligence/Machine Learning to make the tax system more effective.
In a written reply to a question in Lok Sabha, Union Minister of State for Finance Shri Pankaj Chaudhary clearly stated that the government is using these tools to make the tax system more business and tax-payer friendly.
Data analytics is being used by tax authorities to spot suspicious trends and identify risks.
The government had started Project ADVAIT (Advanced Analytics in Indirect Taxes) in 2021, as a flagship analytics project for Indirect Taxes.
The project relies on big data and Artificial Intelligence to achieve threefold objective of enhancing Indirect Tax revenue, increasing taxpayer base, and supporting data-driven tax policy, the Minister stated.
The portal has uses advanced analytical capabilities like data matching, network analysis, pattern recognition, predictive analytics, text mining, forecasting and policy studies.
Data analytics is also helping direct tax authorities in identifying cases with high risk of tax evasion.
Data analytics also helps in sending reminders for advance tax payments,
identify apparent mismatches in ITRs and transactions made, spotting potential high-risk transactions. Data analytics techniques can also be used to focus campaign on high- risk cases from tax evasion perspective.
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