This study explores how Artificial Intelligence (AI) is transforming tax administration in India. AI is helping the government improve efficiency, reduce tax evasion, and make tax processes easier for both officials and taxpayers. With tools like data analytics and machine learning, AI can quickly detect fraud, analyze large sets of financial data, and ensure better compliance. It also supports faster processing of returns and smarter decision-making. As India moves toward a digital economy, AI plays a crucial role in modernizing tax systems, making them more transparent, accurate, and user-friendly for everyone involved. AI is reshaping the landscape of tax administration in India by automating routine tasks, minimizing human errors, and enhancing transparency. It enables tax departments to identify irregularities through predictive analysis and real-time monitoring of transactions. Chatbots and AI-driven platforms are improving taxpayer services by offering instant support and guidance. Additionally, AI helps in risk assessment, audit selection, and fraud detection, ensuring a fair and efficient tax system. As technology continues to evolve, AI has the potential to bridge gaps in tax compliance, reduce administrative costs, and build trust between taxpayers and authorities, paving the way for a more robust tax framework.