Project Insight-2.0 debuts on January 27: How it helps taxpayers?
What's the story
The Finance Ministry is gearing up to launch Project Insight 2.0, on January 27, 2028. The new system uses artificial intelligence (AI) to distinguish between genuine and suspicious tax filings. This move comes as a response to the growing delays in income tax refunds, which have gone from an average of 24 days in FY24 to a whopping 35 days in FY26 (as of January 31).
Delay details
Refunds issued after 90 days
In FY26 (as of January 31), the number of refunds issued after 90 days has increased significantly to around 27 lakh from some 12.73 lakh in FY24.
The total number of refunds during this period was over 3.38 crore compared to some 3.41 crore in the entire fiscal year of FY24.
These statistics highlight a growing concern over refund processing times and efficiency within the system.
Timeline adherence
Citizen Charter's 3-month timeline
The Income Tax department's Citizen Charter specifies a three-month timeline for issuing refunds, starting from the date of passing/receipt of the order or application.
However, a Parliamentary panel recently raised concerns over the delay in processing refunds.
The Ministry has cited two main reasons behind these delays: taxpayers not providing validated bank accounts, PAN and Aadhaar not linked, and adjustments for outstanding demands.
Fraud concerns
Bogus deductions/exemptions claims
Another major reason for the delay in processing refunds is large-scale claims of bogus deductions/exemptions.
The IT department said that this has led to an increase in cases pending for over 90 days and a rise in average processing time.
Other issues include cases flagged as High-Risk Returns, Prima Facie Adjustment cases, variance analysis where the output differs from what was claimed by taxpayers, and various holds for demand adjustments.
System capabilities
Project Insight 2.0 to the rescue
The Finance Ministry has said that many of these issues can be resolved with the launch of Project Insight 2.0, which is currently in development.
The system will employ AI-driven risk scoring algorithms to separate genuine low-risk filings from suspicious ones.
It will also use predictive models to predict fraudulent refund claims and dynamic risk scores that can be updated based on past learnings by ITD users.