AI and ML reshape income tax filing: How technology is changing compliance

Artificial intelligence (AI) and machine learning (ML) are transforming income tax filing and compliance platforms worldwide, helping users reduce errors, save time, and engage with authorities more proactively. Experts say the impact varies across countries, depending on legacy systems, digital infrastructure, and adoption rates.

Anmol Aggarwal, Senior Product Manager at Intuit, one of the largest tax filing companies in the US, said AI and ML are automating repetitive, time-consuming tasks such as data entry, invoice reconciliation, error detection, and cross-jurisdictional rate validation.

“Generative AI is being deployed to improve user experience, automatically categorise transactions, and assist businesses in staying compliant,” Aggarwal told CNBC-TV18.

In the United States, AI adoption is strongest in corporate tax departments and IRS enforcement. Individual taxpayers still rely on commercial software platforms, which integrate generative AI to simplify tax preparation.

Globally, AI is moving toward continuous tax management.

Platforms are shifting from year-end filing to year-round monitoring, proactively nudging users about underpaid taxes, deductions, or compliance gaps.

India’s leap in AI-driven tax filing

Emerging markets like India are adopting cloud-native, AI-first tax platforms that integrate directly with digital public  infrastructure.

The Central Board of Direct Taxes (CBDT) introduced the TAXASSIST chatbot on the e-filing portal, providing plain-language guidance to first-time filers.

According to official data, AI-enabled reminders and nudges from the tax portal have led to 11 million updated returns and generated ₹11,000 crore in additional tax collections since 2022.

Challenges and opportunities in India

Experts say India faces challenges in digital literacy, portal reliability, and linguistic diversity. TAXASSIST and private platforms are beginning to support multiple regional languages, an initiative that could make India a global leader in multilingual AI for tax compliance.

AI also provides opportunities to bring informal economic actors into the formal system through behavioural nudges, real-time monitoring, and cross-database analytics.

Aggarwal highlighted that generative AI and ML are expected to further transform tax filing in India by enabling predictive advisory, one-touch compliance workflows, and personalised guidance for SMEs and gig workers.

“AI will move beyond error-checking to proactive tax planning, making professional advisory more accessible at scale,” he said.

Impact on users

For taxpayers, AI promises reduced anxiety, faster compliance, and more inclusive services. Real-time error detection, pre-filled returns, and plain-language guidance can make self-filing simpler, while multilingual support broadens access for non-English speakers.

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