The Income Tax Department has intensified its efforts in the lead-up to the Income Tax Return filing deadline of September 15, 2025. The department has now started using Artificial Intelligence (AI) to assist in issuing notices. Immediate action is being taken on accounts or returns where discrepancies or differences in information are found. In several cases, taxpayers have received notices based on AI-driven scanning.
AI Assistance Enables Rapid Tracking of Suspicious Transactions
The Income Tax Department is now monitoring transactions through digital systems, moving away from traditional methods. Data from banks, mutual funds, deposit accounts, and credit card transactions is directly linked to the tax system. As soon as a large or suspicious transaction occurs, the system tracks it, and if the information related to it is not found in the ITR, AI triggers an alert.
Bank Transactions Directly Linked to Notice Probabilities
Banks are instructed to prepare and send reports to the tax department if a person's savings account has deposits of ₹10 lakh or more in a year. In such cases, if the information about that deposit amount has not been provided in your tax return or its source is not clear, you may come under the Income Tax Department's scrutiny.
Similarly, if you deposit ₹50 lakh or more in your current account in a financial year, the bank also shares that data with the tax department.
Credit Card Bill Payments Also Under Scrutiny
If you pay a credit card bill of more than ₹1 lakh annually in cash, or more than ₹10 lakh through any other method, this information may also reach the Income Tax Department. If the details of these transactions do not match the return, the risk of a notice remains.
Money Received From Relatives May Also Attract Attention
Often, people have large sums of money transferred from relatives. If a person receives more than ₹10 lakh at once or in a year as a gift or in any other form, and the information is not properly disclosed in the income tax return, it can also be a cause for notice. The department has the right to know why and how such a large amount was transferred.
Reporting Rental Income and Interest Earned on FDs is Essential
Many taxpayers rent out their houses but do not include the income earned from it in their tax returns. Now, the department is also tracking such income. Similarly, if you have ignored the interest income from fixed deposits, the system catches it, and this discrepancy can cause trouble for you.
How Artificial Intelligence is Creating a Complete Data Profile
Under AI technology, the department is consolidating all information related to your PAN number in one place. This includes bank accounts, property purchases, mutual fund investments, stock market transactions, loan information, and your previous years' income tax returns. If any activity does not match or any discrepancy is found in this entire profile, an alert is generated, and the process of sending a notice begins.
Market Purchases or Online Spending Can Also Be a Reason
Nowadays, digital payments and online spending are common. But if you are constantly making large expenses, buying expensive gadgets, or staying in luxury hotels, and there is no record of all this in your return, it may come to the notice of the tax department. Especially if your TDS is not being deducted and you are still making large expenses, the department may question you.
Notices Have Been Sent to Many Taxpayers, Department in Alert Mode
In recent days, the Income Tax Department has sent notices to thousands of taxpayers, requesting details about their banking and investments. Most cases are of those people whose transaction information was not visible in their ITR. The department's focus is now entirely based on data analytics and AI.
Increased Focus Not Only on Income, But Also on Expenses
Now, the Income Tax Department is keeping an eye not only on your earnings but also on your expenses. Therefore, keep complete information and proof of any major expense, so that you can respond in case of any inquiry.
Monitoring to Increase in the Coming Days
With the September 15 ITR deadline approaching, the Income Tax Department's monitoring is going to become stricter. In such a situation, those whose return filing is incomplete, or who have differences in their Form 26AS and AIS data, have started receiving alerts. The AI-based notice system may become even faster in the future.
