How can tax administrations use digitalisation to improve compliance and transparency?

Digitalisation converts tax administration from a paper-based, discretionary enforcement exercise into a data-driven service. The BRICS Heads of Tax Authorities meeting under India's Chairship identified precisely this shift — digitisation of tax administration and the changing role of the tax officer "from enforcement to service" [1].

Improving compliance

• Pre-filled returns and third-party data: linking bank, securities and property reporting to the taxpayer's permanent account number allows returns to be pre-populated, cutting filing effort and inadvertent error — the core logic of India's Annual Information Statement.
• Transaction-level reporting: electronic invoicing and e-way bills under GST create a self-policing audit trail, since a buyer's input credit depends on the seller's declared supply.
• Risk-based scrutiny using analytics: algorithms flag outliers, so scarce audit capacity targets high-risk cases instead of random selection.
• Nudge over notice: e-verification and reminder messages encourage voluntary correction, advancing the enhanced-voluntary-compliance objective endorsed by BRICS tax authorities [1].

Improving transparency

• Faceless, jurisdiction-free assessment removes physical interface, reducing rent-seeking and arbitrariness.
• Automatic exchange of information (AEOI) makes offshore accounts visible without any request. Global Forum members identified nearly EUR 4 billion in additional revenue in 2023 through the transparency standards, of which developing countries reported close to 80% [2].
• Digital public disclosure of rulings, refund status and grievance timelines makes administrative action auditable.

Constraints to address

Data without capacity yields nothing: only 41 developing countries currently exchange automatically, against 129 jurisdictions committed by 2028 [2]. Matching foreign data to domestic returns needs trained officers — the rationale for the BRICS Young Tax Professionals workshop at NADT, Nagpur [3]. Algorithmic profiling must also respect privacy and the right to be heard, and incentive design must be rechecked against the 15% global minimum effective rate [4].

Digitalisation therefore widens the base while narrowing discretion. India's way forward lies in coupling technology with officer capacity, data-protection safeguards and international cooperation — making the tax system efficient, equitable and trusted.