India is on the verge of becoming the world’s first country to deploy Machine Learning algorithmic systems in its tax assessment process. We assess how Finance Minister Nirmala Sitharaman’s promise to adopt this revolutionary assessment system from October this year affects the process.
Economies around the world have long been dependent on manual procedures to assess tax collections. With India deploying AI/ML in the process, makes it not only the first country to do so, but to also symbolise the solutions that AI and ML proposes to solve in the field of finance.
Makes India an early adopter
For most countries, their tax assessment system still heavily relies on manual procedures. India being one of the world’s largest economies that are ready to adopt AI/ML in their process incurs confidence in other economies to rethink about their systems and procedures.
This also encourages businesses across India to consider deploying ML in their tax logging systems. Reducing chances of errors, redundancies and confirm accuracy during their self assessments and audits.
Fighting illicit activities
The Finance Minister in June had said that the existing system of scrutiny assessments in the IT Department involves a high level of personal interaction between the taxpayer and the Department, which leads to certain undesirable practices on the part of tax officials.
The newer system proposes to implement a faceless assessment system reducing the levels of personal interactions between the tax payer and the officials. Thus, nullifying human interaction from the process to make it corruption-free and safe from undesirable practices.
Mannered collection of data
India has for long had problems gathering and dealing with data due to its massive unorganized section of the economy. Whilst the government has taken many steps to resolve the issue, the underlying cause of it relies in the way data is collected.
The new proposal proposes a phased collection of taxes and their assessments along with e-assessments that will be carried out where further verification of the entity is required.
