Things to Keep in Mind When Using AI to File Your ITR for FY 2024-25

As artificial intelligence (AI) continues to revolutionise personal finance, many individuals are now turning to AI-powered platforms to simplify their income tax return (ITR) filing process. While AI tools can save time, reduce errors, and make tax filing more accessible, it's important to use them wisely.

Here are 5 key things to keep in mind when using AI to file your ITR:

Data Accuracy and Verification

AI can help prefill and organise your data, but the responsibility for accuracy is still yours. Double-check all details of PAN, income, deductions, bank accounts, and Form 16 entries before submission. AI may pull in incorrect or outdated information if the source of data is flawed.

Cross-verify your official documents and income statements before finalising the return.

Comprehensive Reporting

When filing your ITR, it's crucial to report all income sources, not just salary. Many AI tools primarily handle ITR-1 (Sahaj), which is suited for salaried individuals with simple returns. However, if you have capital gains, rental income, business income, or foreign assets, you may need to file ITR-2, ITR-3, or others each with different schedules and disclosures.

Before using an AI tool, check whether it supports multiple ITR forms and correctly includes capital gains statements, interest from FDs, or foreign income.

Understanding AI's Limitations

AI tools can simplify ITR filing for FY 2024–25, but they aren't a substitute for expert tax advice especially if you’re a freelancer, self-employed, or claiming deductions under new sections introduced this year. AI might not fully account for the latest rule changes, such as regime specific deductions, capital gains nuances, or sector-specific exemptions.

Treat AI as a filing assistant, not an advisor. If your tax situation is non-standard or if you’re unsure whether to opt for the new vs old tax regime, consult a CA or tax consultant for accurate filing.

Security and Privacy

Filing ITR for FY 2024–25 involves sharing sensitive PAN-linked details, bank data, and income proofs. With rising cyber threats, it’s crucial to use AI platforms that offer end-to-end encryption, two-factor authentication, and comply with India’s latest data protection norms.

Only use government-authorised or trusted platforms that are cleared by the Income Tax Department or RBI-regulated entities. Avoid filing through apps that lack transparency or host data outside India.

Staying Compliant and Avoiding Penalties

AI tools can help track due dates and flag deductions, but you remain legally responsible for your return. For FY 2024-25, errors due to missed Form 26AS entries, AIS mismatches, or incorrect deduction claims can trigger notices, penalties, or delayed refunds, even if the mistake was AI generated.

Before submitting, always review Form 26AS, AIS, and prefilled data. After filing, download and save your ITR form, Income Tax Return – Verification (ITR-V), and confirmation email for audit trails.

Conclusion

AI-powered platforms can be a valuable aid in simplifying and speeding up ITR filing for FY 2024–25, especially for individuals with straightforward income sources. However, it's essential to approach them with awareness. 

Ensuring accuracy, understanding tool limitations, protecting personal data, and complying with current tax rules remain your responsibility as a taxpayer. Use AI tools as supportive enablers not replacements for informed and responsible tax filing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.