Ahead of New Income Tax Bill, CBDT Doubles Down on Tech-Led Efficiency in Reporting & Filing

The Central Board of Direct Taxes (CBDT) is aiming to ramp up its crackdown on tax evasion by using data analytics and artificial intelligence (AI) to detect discrepancies in the reporting of income, chairman Ravi Agrawal said. This comes ahead of the new income tax law that is set to be tabled by the Parliament in the ongoing monsoon session.

Speaking to the Economic Times, the CBDT Chairman said, “With access to over 6.5 billion domestic digital transactions and the exchange of information with overseas agencies, the Income Tax Department is poised to detect evasion more effectively.”

Further explaining the stepping up of this crackdown process, Agrawal said, “The next phase of AI usage would be more intense, with reporting agencies providing more mature data for carrying out detailed analytics to identify evaders and hit the right targets.”

He also eased concerns over tax authorities’ powers to access digital records. “This is strictly restricted to search and seizure operations where taxpayers refuse to share information, and are not aimed at snooping on ordinary taxpayers,” he said.

The Income Tax Department has been actively providing information to taxpayers about their financial transactions, in order to encourage voluntary compliance.

Recently a campaign led to the withdrawal of tax deduction claims worth Rs 963 crore and the payment of Rs 409.50 crore in additional taxes between April 1, 2023, and June 18, 2025. Additionally, a total of 30,161 taxpayers declared foreign assets worth Rs 29,208 crore and foreign income of Rs 1,089 crore between November 2024 and March 31, 2025.

Talking about the same, Agrawal said that this was the result of analytics. “We were able to carry out a pan-India operation,” he noted.

He further mentioned that the tax authorities have clearly stated that the department is non-intrusive and is a facilitator but it is keeping a watch. Another campaign like this will be rolled out this year using fresh data sets, he added.

Evolving Tech, Increasing Efficiency

Agrawal noted that the data received under various information exchange agreements with various countries had improved over the past two years. “The quality of information has improved because they have also understood our requirements and it is helping us identify taxpayers that hold foreign assets,” he added.

With technology evolving to tackle issues of the dark web, crypto and other new forms of transactions, the department has also started putting emphasis on regular updates.

Agrawal further told ET that India is actively participating and contributing to discussions on the Crypto-Asset Reporting Framework at global forums. He said, “India's voice in all these platforms is being heard. We are deliberating as to how best we can actually exchange information.”

Addressing the issue of efficiency, the CBDT chairman noted that digitisation has helped expand the taxpayer base from 30 million in FY14 to 90 million in FY25. In addition, data has revealed that gross refunds issued increased by 474%, going from Rs 83,008 crore in FY14 to Rs 4.76 lakh crore in FY25 - with the average refund processing time dropping to 17 days from 93 earlier.

In terms of income tax returns, it has been seen that about 22% of them were processed within a day and 26% in two to seven days. Currently, the department is collating annual data on about 6.5 billion transactions to prepare pre-filled forms for about 400 million taxpayers, with 99% of them agreeing with the information provided. “As a country, we should appreciate the background effort in pre-population of ITRs (income tax returns), which is prompting taxpayers towards compliance,” he said.

Income Tax Bill 2025

The Parliament select committee has started submitting a report on the new income tax bill and thereby the real work for the department starts now. Commenting on this, Agrawal said, “The bill is the first step, and associated with this will be rules, forms and capacity building.”

As of now, the focus would be to gear up the department for the massive transformation expected. The new law will take effect from April 1, 2026, once approved by both the houses of the Parliament.