What is Artificial Intelligence?

Artificial Intelligence (AI) is a blend of two words Artificial and Intelligence. Artificial means made by human work or art, not by nature i.e. not natural. Artificial Intelligence is the ability of Computers to do the work of human being. They receive inputs from the environment, interpret them and try to achieve a particular goal based on this data.

From SIRI to self-driving cars, artificial intelligence (AI) is progressing rapidly. While science fiction often portrays AI as robots with human-like characteristics, AI can encompass anything from Google’s search algorithms to IBM’s Watson to autonomous weapons.

GST (Goods & Services Tax)

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Services Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017. Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

Artificial Intelligence can help in managing GST compliance, curb tax Evasion and arranged better Economic data in the following ways:-

Electronic invoicing (e-invoicing) is the system of validating transaction details real time in a portal run by National Informatics Centre on real time basis & is compulsory for Persons up to a Certain Turnover. The data included in the e-invoice—details of buyers, sellers, the description of the item sold as per the harmonized system of nomenclature (HSN), the amount and the tax payable—will be used to pre-populate some of the tax return forms and to compute the eligible tax credit and tax liability of the parties to the transaction. The government’s move is towards pre-filled return forms which businesses can validate or modify at the end of every month. The icing on the cake is the ability of tax administration to intercept a bogus transaction. Already, with data mining and use of artificial intelligence, officials are able to nail bogus invoices and shell companieson time and protect the Revenue.

Input Tax Reconciliation under GST is about matching the Purchase Register and the GSTR-2A, which is auto, populated based on GSTR 1 filing by the respective suppliers of the Enterprise. GST Input Tax Reconciliation is important to ensure timely and accurate input tax credit as well as for the correctness of various returns. Incorrect ITC claims affect the compliance health of the organization. Wrong or delayed GST credit means leaving money on the table and it can affect top line of the company by approximately 5%-6%. For large enterprises, this figure in Rupees could run into Tens of Crores. The process of reconciliation becomes complex for large organizations with multiple legal entities, multiple GSTNs, large vendor base and large data volumes. There may also be timing issue as some suppliers may file in one month, while customer processes the invoices in coming months.
Many organizations lack proper controls in their Accounts Payable (AP) processes. For instance, in many cases, supplier invoices are being tracked manually which results in large volumes of invoices appearing in GSTR 2A but are not accounted for input tax credit. Manual data entry for invoices also adds to reconciliation issues. The taxpayers are required to continuously keep an eye on any discrepancy or mismatches that may affect the ITC claim and should try to rectify the errors. Executing the reconciliation manually or with the use of a basic excel sheet is a tedious and time-consuming task and does not guarantee 100% accuracy. This calls for a proper process and system for executing the reconciliation effectively and efficiently. Most enterprises have reconciliation issues with GSTR-2A & PR (Purchase Register) data. On average, at least 30% of GSTR-2A data is not present in PR, indicating gaps in AP process. This might result into delayed credit as well as mis-representation of accounts

AI based Technology Service:
An AI/ML (Artificial Intelligence/ Machine Learning) based technology platform helps the organization in understanding different types of invoices. An important feature would be to extract information from scanned copies of invoices and create purchase register automatically. This also helps in understanding the different formats of Purchase Registers and reconciles of data is efficiently done in different buckets like matches(auto match and AI based them with GSTR2A. It also reconciles voluminous data faster with high accuracy. Categorization match), mismatches, invalid data and missing data.

India is shifting its focus from man to machine for improving the speed and quality of the economic data. For long, India’s economic data has been criticized to be inadequate, delayed and confusing courtesy the sharp and unexpected revisions. But going forward, the Ministry of Statistics is ramping up AI applications for collecting, analyzing, and reporting data to monitor the economy in a better way.

India is a rapidly growing economy and has been on top of world affairs when it comes to being involved with new initiatives and technologies to improve current economic and other practices. The government is actively involving modern technologies such as artificial intelligence, analytics, and others into existing process for national benefit.
Indian Finance Minister Nirmala Sitharaman also announced the usage of deep analytics and Artificial Intelligence to track tax evasion in the Goods and Service Tax Network (GSTN). Sitharaman said, “The capacity of the GSTN system has also been enhanced. We have also deployed deep analytics and Artificial Intelligence to identify tax evaders and fake billers and launched special drives against them.” The Indian government previously has used Machine Learning (ML) tools to fight tax evasion. This includes Project Insight. The project was launched in October 2017 to track tax evaders through technology, and further curb black money.

A GST Return is a document that mentions all details related to GST invoices, payments, and receipts for a specific period. These are the main documents through which GST officials and taxpayers are connected. Now-a-days tax filings have become faceless and this has only been possible with the help of AI. GSTR – 1, GSTR- 2, GSTR – 2A, GSTR – 3B and much more cannot be a success without A


In a country like India which is yet at the developing stage, we need some transformational changes in the tax structure or in our tax system to increase the tax revenue of Government. Use of Artificial Intelligence and Machine Learning will lead us to foster Indian tax administration process, transparency in tax process, find out new tax payers, and prevent tax fraud, tax evasion etc. We know that change is inevitable; AI will be industrial revolution 4.0 in the world like in previous century computers, electrical energy were. Now a day’s AI is applied in many sectors and it is growing day by day but we need to understand what is required to make this a success in Indian tax structure. We need to provide the correct data for the training to the machine so that it will reduce the bias or it will get the correct bias. Government is making a lot expenditure to make tax system integrated with artificial intelligence but if taxpayers are not aware about the system then it will be difficult to make this reform a success. Government requires a system which is based on Artificial intelligence and taxpayers are ready for upcoming technological change in the system but they do not want to end the human intervention. Taxpayers strongly believe that using a tax system which is based on artificial intelligence will be safe, secure and comfortable to use. If the taxpayers trust on entire tax system then only they will provide the correct data and due to that we will be able to get a very strong tax administration system but for that government need to make people aware about the system and make the system transparent so that it will build the taxpayers trust and they will accept this as a helping tool for fair and transparent.