The Central Board of Direct Taxes (CBDT) plans to step up its use of artificial intelligence (AI) and data tools to detect tax evasion, says chairman Ravi Agrawal. This move comes just as Parliament debates a new income tax law. 

The department has access to a massive volume of financial data—over 6.5 billion domestic digital transactions and international intelligence—allowing officials to pinpoint mismatches in reported income more accurately. Agrawal assures that AI checks will happen only in targeted cases linked to tax evasion, not routine returns. 

Since April 2023, the tax department’s efforts have led to taxpayers correcting wrongful deduction claims worth ₹963 crore, and paying ₹409.5 crore in additional taxes. Around 11 million returns were updated, generating ₹11,000 crore extra. AI tools are also being used to detect scams like false HRA and medical claims, as seen in recent Gujarat investigations. This data-led approach helped recover ₹20,000 crore in tax dues by March 2025—double last year’s effort.

While the CBDT reassures citizens that privacy and data protection remain priorities, it stresses that stronger checks may begin once the new tax law is in place. As digital finance grows, such AI-led enforcement may become key to curbing evasion and widening the tax base.