AI-Driven Surge in GST Show-Cause Notices: India’s Tax Landscape Evolves

December 13, 20230

Type: Legislation

Indian businesses in shipping, gaming, insurance, and airlines are grappling with a surge in Goods & Services Tax (GST) Show-Cause Notices (SCN), totaling over 33,000 this year for payment discrepancies during 2017-18. This rise is attributed to the Ministry of Finance’s tax investigators, the Directorate General of Goods and Services Tax Intelligence (DGGI), employing Artificial Intelligence to identify tax fraud. The AI, focused on interpretative aspects of the GST Act and analyzing case law since 2017, recently led to a bulk issuance of automated SCNs, flagging discrepancies in areas like GST input tax credits and exemptions. 

India, a trailblazer in AI adoption for tax purposes since May 2023, now employs it to combat fraudulent applications for input tax credits through false GST registrations. The government’s crackdown on evasion and non-GST registration is intensified, with automatic assessments using online transactional data analytics. Any data manipulation or gaps are promptly detected, ensuring businesses meet their tax liabilities. 


Effective date: December 2023



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