Imagine you are stuck with your taxes and everything seems so complicated, not knowing about your deductions, interpreting tax laws feels like rocket science, and due dates, deadlines, multiple forms, and unorganised data are stressing you out.
That’s when you know you need an assistant, and here we are not talking about a human assistant, but a technology acting as your Tax Assistant, i.e., AI as your Tax assistant.
In this blog, you will understand how AI can provide you with Tax Assistance and can save, plan, and pay taxes on your behalf, so that you can stress less and focus more.
About Indian Taxation System
In India, the Income Tax Act,1961, provides income tax rules. It tells about how the taxes are charged, collected, and managed by the government.
Various kinds of income are covered under the act:
- Income from Salary
- Income from House property
- Profit and gains from business and profession
- Capital gains and other sources
It also talks about various deductions, tax assessment, TDS (Tax Deducted at Source)/ TCS (Tax Collected at Source), fines and penalties, filing of tax returns, and Appeals.
We have a three-tier taxation system in India, given as under:
- Central Government (Income tax, corporate tax, CGST, customs duty, etc.)
- State Government (tax on agricultural income, VAT, stamp duty, etc.)
- Local bodies (Property tax, Municipal tax, etc.)
Role of AI as your Tax Assistant
AI as your Tax Assistant can handle a lot of routine and manual tasks and filings within stipulated deadlines, which increases accuracy and saves a lot of time.
Let us understand its key roles:
- Helps you file your ITR on time
- Automates tax calculations
- Keeps you updated with Current Tax Laws
- Can advise you on Tax Planning and Benefits
- Organise your tax documents and keep them in one place
- Helps you with missed documents and forms
- Interprets and simplifies tax laws
How to use AI as your Tax Assistant
AI as your tax assistant can be very helpful, and choosing the right tool can make it less complicated.
Here’s how you can use AI to manage your taxes:
- At the very first stage, you should choose the right tool according to your needs and preferences.
- Provide your data and documents that you think will be required by AI.
- AI will automate all your manual work, be it data entry, ITR filing, meeting deadlines, and so on.
- It resolves all queries 24/7, like updating with current tax laws, when to file ITR, deductions under 80C, etc.
- It will advise you on the tax benefits and help you save your taxes the right way.
- It will assist you with filing tax returns within the due date and keep you updated.
Examples of AI Tax Assistants
Here are various examples of AI tax assistants:
1. Taxbuddy
It is an AI-powered platform that makes it easier to file taxes through self-service or expert assistance.
Key features:
- Provides real-time support from CAs
- Assists with Tax Planning
- Helps in tax saving
- Expert-assisted ITR filing
2. GST Zen
It is cloud-based software that streamlines GST compliance and is designed for businesses of all sizes.
Key features:
- Automated Tax Calculations
- Simplify e-invoicing
- Helps in GST return filing
- Generates e-way bills.
3. ClearTax
This is the most popular software, especially designed for first-time users, as it simplifies ITR filing with a step-by-step guide.
Key features:
- Provides step-by-step ITR filing guidance
- Easy import of AIS/TIS data
- The basic version is free for salary users
- Auto-import of Form 16
4. EZTax
This software is good for both salaried individuals and businesses as it provides solutions for ITR, GST, and TDS return filing.
Key features:
- Cloud-based Software
- Assists in ITR, GST, and TDS return filing
- It can file ITR for free
- Provides All-in-one tax features
5. Gen TDS Software
This tool is specifically for TDS management. It is highly favoured for its TDS management features and compliance accuracy.
Key features:
- Automated TDS calculations and e-filing
- Form 16 & Form 16A generation
- TDS reconciliation with Form 26AS
Benefits of Using AI as a Tax Assistant
AI will make managing taxes easier, faster, and accurate. Here are the benefits of using AI as your tax assistant:
- It quickly does routine tasks like the preparation of documents, analysing data, and filling out forms.
- AI-powered tax assistants never miss out on any data, thereby reducing errors and giving accurate results.
- They are affordable, and by reducing errors and adhering to deadlines, you will save yourself from heavy penalties.
- AI gets updated with the current tax laws, so you don’t need to worry about missing out on it.
- AI will provide you with advice on how to save taxes and manage your finances, on the basis of your income and spending.
- AI as your tax assistant is user-friendly and very easy to work with; it even interprets tax laws for you.
- It is available 24/7, so you can work with it whenever you want, no more long hours and appointments.
Challenges and limitations
AI-powered tax assistance is a game-changing tool for taxpayers, but it carries certain challenges and limitations. Let’s understand them one by one:
- It may not be able to advise like an expert in certain areas.
- Incomplete and wrong data will give inaccurate results.
- AI may not be able to keep up with frequently changing tax laws, leading to mistakes and missed deadlines.
- It is a proven study that AI-powered tax assistants sometimes provide wrong advice, which can mislead taxpayers.
- AI has all your confidential data, so privacy is a major concern with a third-party AI system installed.
- Unlike humans, AI won’t be held accountable for its wrong information, which will leave you helpless in the end.
- Installing AI systems and providing training and guidance on how to use them can be costly to smaller firms.
Final Thoughts
Many small firms and big companies have already started adopting AI as their Tax Assistant and planning their taxes effectively, filing returns, organising data and forms, etc, and because of that, they are already ahead of those who are stuck doing everything on their own and dealing with errors and calculations.
It’s high time you should also use AI as your Tax assistant, be it ITR filing or Tax planning, AI has made everything less complicated and more efficient for you. In the future, AI assistance and human judgment will together prevent you from paying heavy taxes and save you from penalties for delayed filing.
FAQs
- How can AI become a Tax Assistant?
AI can become a Tax Assistant by minimising errors and giving accurate results, automating manual tasks, assisting in ITR filing, advising on tax planning, and keeping you updated with your benefits as a taxpayer. - Can AI replace Tax professionals?
No, AI won’t replace Tax professionals. Using AI as your tax assistant will not replace you; rather, it will make you stress-free to focus on more important areas that require human brain and thinking power. - How is AI used in taxation?
There are many ways in which AI is used in taxation, i.e., compliance with tax laws, organising data, meeting deadlines, planning and saving taxes, tax audits, and 24/7 chatbots for queries. - How does AI assist in Tax planning?
AI assists in tax planning by looking at the current financial data and coming to conclusions based on that, like where to invest, eligible deductions, tax benefits, alerts on finding loopholes, and future opportunities. - How does AI assist in filing ITR?
AI makes ITR filing way easier. With AI Tax Assistance tools, you can file ITR with the help of experts, with the choice of filing automatically, and get step-by-step guidance with live error detection and solutions. - Is it safe to share financial data with AI tax assistants?
Financial data is sensitive, and if you are sharing it with AI, make sure it is encrypted and follows basic protocols, then it is safe. Still, you should check the privacy policy and not share your data on any unsecured network.
Relevant Blogs:
