More digital nudges weighed as taxman pushes compliance

Tech, AI-driven 'nudging' is a key element of the tax department's new toolkit, say experts

- Gireesh Chandra Prasad

Armed with a heavy dose of technology, the income tax department is planning to step up its 'nudging'—non-intrusive engagement with individuals and businesses—for tax compliance, while also gearing up its systems and field office to respond more effectively to taxpayer grievances, two persons informed about the development said.

The idea is to leverage data and technology, which will make tax compliance more voluntary, impersonal and automated, a strategy the department has already successfully tested in the last few years, said one of the two persons.

Accordingly, the tax authority will step up its interaction with taxpayers through emails and text messages.

"Stepping up information-led nudging for voluntary tax compliance and ensuring greater responsiveness by the department officials is a priority for this year. We are already using this approach of nudging in e-verification of transactions and tax return updating. It will be expanded," said the person, who spoke on condition of not being named.