UPSC Prelims Practice Questions — AI-powered tax governance in India and its challenges

Q1. Which one of the following is the flagship Artificial Intelligence and data-analytics platform of the Income Tax Department for risk assessment and widening of the tax base?

  • A. Project Insight
  • B. INTRAC
  • C. CMCPC
  • D. Annual Information Return (AIR) system

Q2. In the context of CBDT's use of artificial intelligence for tax compliance, the acronym 'NUDGE' refers to which of the following?

  • A. National Unified Data and Governance Engine
  • B. Non-intrusive Usage of Data to Guide and Enable
  • C. Networked Utility for Direct Generation of E-assessments
  • D. Notice-based Universal Demand Generation Exercise

Q3. The tender for designing, developing and operating Project Insight 2.0, floated in December 2024, was issued by which one of the following authorities?

  • A. Central Board of Indirect Taxes and Customs (CBIC)
  • B. Goods and Services Tax Network (GSTN)
  • C. Directorate of Income Tax (Systems), under CBDT
  • D. Directorate General of Income Tax (Investigation), under CBDT

Q4. With reference to India's AI-powered tax-governance architecture, consider the following: 1. INTRAC functions as the analytical engine that builds a 360-degree taxpayer financial profile from internal and external data. 2. CMCPC (Compliance Management Centralised Processing Centre) uses insights generated by INTRAC to flag potential under-reporting cases. 3. Kar Saathi is an AI-enabled chatbot launched under the PRARAMBH 2026 campaign to assist taxpayers on the new Income Tax Act, 2025. 4. The Faceless Assessment Scheme was introduced by the Finance Act, 2017 and is governed by Section 139 of the Income Tax Act. Which of the above is/are correctly identified?

  1. INTRAC functions as the analytical engine that builds a 360-degree taxpayer financial profile from internal and external data.
  2. CMCPC (Compliance Management Centralised Processing Centre) uses insights generated by INTRAC to flag potential under-reporting cases.
  3. Kar Saathi is an AI-enabled chatbot launched under the PRARAMBH 2026 campaign to assist taxpayers on the new Income Tax Act, 2025.
  4. The Faceless Assessment Scheme was introduced by the Finance Act, 2017 and is governed by Section 139 of the Income Tax Act.
  • A. 1, 2 and 3 only
  • B. 1 and 4 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q5. With reference to Project Insight and its successor Project Insight 2.0, consider the following statements: 1. The original Project Insight contract was signed with L&T Infotech Ltd in 2017. 2. Project Insight became fully operational in the same year its implementation contract was signed. 3. The tender for Project Insight 2.0 was floated in December 2024 by the Directorate of Income Tax (Systems). Which of the statements given above is/are correct?

  1. The original Project Insight contract was signed with L&T Infotech Ltd in 2017.
  2. Project Insight became fully operational in the same year its implementation contract was signed.
  3. The tender for Project Insight 2.0 was floated in December 2024 by the Directorate of Income Tax (Systems).
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3