Tax experts say AI can be useful for basic explanations and organising information, but generic AI tools may not always account for the complexities involved in tax filing, including calculations, exemptions and individual circumstances.
As four experts told CNBC-TV18, taxpayers using AI for ITR-related assistance need to verify the information before relying on it.
Why AI-generated tax advice may go wrong
According to Archit Gupta, Founder and CEO of ClearTax, an Indian financial technology platform, one of the biggest challenges with AI tools is that they can provide responses with high confidence even when the information may not be accurate.
“A chatbot can draft a confident-sounding answer, but filing a return demands accuracy, not confidence,” he said.
Gupta said relying only on generic AI tools could lead to mistakes such as selecting an unsuitable tax regime or missing differences between reported income and details available in the Annual Information Statement (AIS).
“If the tax department seeks clarification, the taxpayer is responsible for responding, not the AI tool that generated the answer,” he added.
Sonam Chandwani, Managing Partner at KS Legal and Associates, a full-service law firm based in Mumbai, said AI can help simplify tax concepts and organise information, but complex tax decisions require professional evaluation.
“An incorrect disclosure, omission or classification, even if generated by an AI tool, remains attributable to the taxpayer,” she said.
She added that AI may not capture specific aspects such as residential status, treaty-linked exemptions and changes arising from amendments or judicial rulings.
CA Sakchi Jain, an independent chartered accountant based in Ranchi, said general-purpose AI tools are not designed around India’s tax compliance framework.
“These tools generate responses rather than perform fixed calculations. The same query may also result in different answers depending on the details provided,” she said.
Can AI handle complex ITR calculations?
Experts said tax filing today often involves multiple income sources, making document verification important.
“AI needs to work alongside existing tax systems, not replace them. With taxpayers earning income from capital gains, investments and businesses apart from salaries, accurate filing requires checking Form 16, capital gains statements and bank records,” Gupta said.
He added that generative AI is built for language-based tasks and not for precise tax computations.
At ClearTax, Gupta said, AI is used to explain tax concepts, while calculations are handled through a separate tax engine.
Chandwani said AI responses depend on the information available to the tool and may not address complicated cases involving business income adjustments, sector-specific deductions or specialised exemptions.
CA Suraj Singh, Founder of S D Singh & Associates, Mumbai, a boutique tax, finance, and corporate advisory firm, said capital gains calculations are one example where a complete understanding of the taxpayer’s situation is required.
He pointed to factors such as grandfathering rules, indexation provisions, exemptions under Sections 54, 54F and 54EC, and loss adjustments that may affect tax calculations.
AI assistance does not change tax liability
Experts said using AI while preparing an ITR does not shift the responsibility for the information reported in the return.
Gupta said an AI-generated response cannot be cited as a defence if a return is questioned during assessment.
Chandwani said taxpayers remain responsible for accurate disclosures under tax laws. While proper documentation and correction of genuine mistakes may be considered, AI usage alone does not remove the obligation to report correct information.
Jain said an unintentional error may be relevant in certain cases, but such considerations apply to filing mistakes generally and are not specific to AI-assisted returns.
Sharing tax documents with AI tools raises privacy concerns
Experts also highlighted risks related to sharing financial information with AI platforms.
Gupta said tax returns contain sensitive financial details, and users should understand how a platform stores and handles information before uploading documents.
“Taxpayers should know where the data is stored, whether it is used for model training and who is accountable in case of a breach,” he said.
Chandwani said documents such as PAN details, bank records and property information require careful handling. She advised taxpayers to check privacy policies and data retention practices before sharing such information with third-party AI platforms.
Jain added that employees uploading documents such as salary slips or Form 16 should also consider whether such sharing complies with their employer’s internal data policies.
AI can make tax-related information easier to understand, but experts said taxpayers need to verify the output before using it for ITR filing.
Also read: AI and ML reshape income tax filing: How technology is changing compliance
