- India will deploy Project Insight 2.0 to automate income tax verification using artificial intelligence on January 27, 2028.
- The AI system will cross-reference taxpayer data with bank records, property registries, and social media footprints for profiling.
- Automated checks aim to reduce refund delays which averaged 35 days in early 2026 for compliant taxpayers.
India's Income Tax Department plans to deploy Project Insight 2.0 on January 27, 2028, using artificial intelligence to sort genuine tax filings from returns it considers suspicious or high-risk.
The system aims to reduce delays in income tax refunds by automating checks on low-risk returns. The department's official website provides the government tax administration portal.
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Refund processing has slowed. As of January 31, 2026 (FY 2025-26), the average wait reached 35 days, compared with 24 days in FY 2023-24.
The backlog also expanded. About 27 lakh refunds remained pending for more than 90 days in FY26, up from 12.73 lakh in FY24.
The planned launch gives the tax authority time to build a broader data-screening network. It follows the original Project Insight, which launched in 2017 to improve tax compliance and transparency.
The system will compare returns with financial records
The Indian Ministry of Finance, through the Income Tax Department, is leading the initiative. LTIMindtree reportedly secured a ₹3,000 crore contract to develop and execute it.
The department will modify AI software to compare taxpayer information across multiple records. Those checks will connect Permanent Account Numbers, or PAN, and Aadhaar details with bank accounts, fixed deposits, share transactions and property registries.
The process will not stop at tax forms. The planned 360-Degree Profiling approach will also examine lifestyle spending, luxury vehicle purchases and social media footprints to identify possible undisclosed income.
That data analysis is intended to support what the department describes as “non-intrusive” compliance. Officials aim to find discrepancies electronically rather than rely primarily on physical audits.
The system will sort filings by risk. Consistent returns could move through automated verification, while mismatched or unusual claims could receive additional scrutiny.
The department links refund delays to questionable deduction claims
Large-scale claims for “bogus deductions” have been identified as a major reason refunds take longer, according to the government context surrounding the project. Automated flagging would allow officials to separate those claims from filings that match available financial data.
Low-risk returns are central to the refund plan. The Income Tax Department's Citizen Charter specifies a three-month timeline for issuing refunds, and the new system aims to help the department meet that standard through automated checks.
High-risk returns would follow a different path. Examples include mismatched donation claims and undeclared bank accounts, which could trigger enhanced scrutiny and potential automated reassessment.
The planned process changes the point at which discrepancies are detected. Instead of waiting for a later review, the department would use linked records during refund verification.
Taxpayers with overseas links may face broader matching
The initiative covers individuals and businesses that file Indian income tax returns. Taxpayers whose filings align with known financial information could receive refunds more quickly once the system operates.
Non-resident Indians also fall within the broader information-sharing framework connected to Project Insight. Foreign income and assets are increasingly being reconciled through agreements involving more than 170 countries.
That international reach adds overseas information to the department's domestic checks. It also gives the authority more data for comparing reported income, assets and transactions.
The project therefore has two tracks. One is faster processing for returns that pass automated checks. The other is deeper examination of filings that conflict with linked records.
January 27, 2028, is the planned implementation date
The department has set January 27, 2028, for implementation. The stated objective is to curb refund delays while maintaining closer scrutiny of claims that do not match taxpayer records.
The numbers behind the rollout show the pressure facing the current process. Average delays rose from 24 days in FY 2023-24 to 35 days as of January 31, 2026, while refunds pending beyond 90 days climbed from 12.73 lakh to approximately 27 lakh.
The department's three-month Citizen Charter timeline remains the benchmark. Project Insight 2.0 is designed to automate verification of “low-risk” returns against that deadline.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
