Taxman using AI to track deductions; more notices expected this filing season, says expert
Published in CNBC TV18 | June 2025
The Income Tax Department is using artificial intelligence and data analytics to detect suspicious deduction claims under Sections 80C and 10(14), according to Avnish Arora, Executive Director, Direct Tax at Forvis Mazars in India.
Section 80C covers deductions for life insurance premiums, ELSS, PPF, tuition fees, and home loan principal payments. Section 10(14) includes allowances such as children’s education, which require valid proof.
Arora said the department now cross-verifies taxpayer claims with third-party data from banks, mutual funds, and employers. This is done using the Annual Information Statement (AIS), Statement of Financial Transactions (SFT), and other digital records.