An Analytical Study of Artificial Intelligence and Machine Learning Applications in Indian Tax Administration

Abstract

Taxation forms an important source of public revenue in the case of a developing economy like India. The Indian Taxation System has been plagued with issues like tax evasion, inefficient administration etc. There should be such a system in place for the administration of taxation which will have minimal errors and fast decision-making capabilities. The Indian taxation system has faced issues like shortage of manpower for doing repetitive work like data entry, scrutiny of tax return, tax audit etc. In order to cope up with the dynamic tax environment and application of analytics, the Indian government has introduced the concept of Artificial Intelligence/Machine Learning in the tax assessment system.

Artificial intelligence is a recent development in the field of taxes. The Indian Government has recently announced that the faceless tax assessment system will use Artificial Intelligence/Machine Learning. This study intends to analyze the importance of AI/ML in the Indian taxation system and on the basis of factors such as tax knowledge, tax education, legal sanctions, complexity of the tax system, relationship with tax authorities, perceived fairness of the tax system, ethics and attitude towards tax compliance, awareness of tax offences and penalties, tax education, possibility of tax audit etc., we want to analyze the perception of taxpayers in adopting the Artificial Intelligence based tax system.