The Income Tax Department has begun using Artificial Intelligence (AI) to monitor financial activities across bank accounts to detect any unusual transaction patterns and potential tax evasion cases.
According to official sources, the AI-driven system can track savings accounts to identify instances where account holders maintain unusually high balances despite limited expenditure. If the declared income and account activity do not match, taxpayers may face queries regarding the source of their funds.
The department’s AI-based analysis has reportedly uncovered several cases where individuals were found using undisclosed or unexplained money in their day-to-day transactions.
In many such cases, people deposited large sums in savings accounts but made minimal withdrawals, raising suspicion of undeclared income or black money usage.
Senior officials said the system uses data analytics to evaluate PAN-linked financial transactions throughout the year. It flags accounts where deposits consistently exceed withdrawals by a significant margin.
Typically, salaried individuals spend 30–40% of their income on daily needs, hence, accounts showing abnormal balance retention are being scrutinised for possible tax evasion.
Officials also noted that earlier, such practices were more common among business owners, who would show personal expenses as company costs. However, similar patterns are now being observed among salaried taxpayers as well. For instance, individuals earning rental income in cash often fail to declare it in their income tax returns, which is a violation.
The department has already begun issuing notices to taxpayers flagged by the AI.
Source from: https://english.gujaratsamachar.com/news/business/income-tax-department-to-use-ai-for-monitoring-bank-accounts
