India’s Finance Ministry has sounded a note of caution over emerging artificial intelligence threats even as confusion grows around new tax rules for travellers. Finance Minister Nirmala Sitharaman on Thursday chaired a high-level meeting with banking leaders, focusing on cybersecurity preparedness in the age of advanced AI models such as Anthropic’s Claude Mythos.
Govt Flags ‘Unprecedented’ AI Threat To Banking System
Senior officials, including IT Minister Ashwini Vaishnaw, joined discussions that examined how next-generation AI could pose systemic risks. Claude Mythos, developed by Anthropic, is being described as a highly advanced cybersecurity-capable model, raising concerns about its potential misuse.
According to a post shared by the Finance Ministry on X, Sitharaman warned that the risks linked to such AI systems are “unprecedented and requires a very high degree of vigilance, preparedness and better coordination across financial institutions and banks.” She urged banks to strengthen detection systems and response mechanisms to counter any emerging cyber threats targeting the financial ecosystem.
The meeting reflects growing global anxiety around AI tools that could potentially bypass traditional security layers, forcing governments and institutions to rethink digital safeguards.
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Section 420 Triggers Travel Rule Confusion
At the same time, a separate concern has been brewing among taxpayers over the newly introduced provisions under the Income-tax Act, 2025. A widespread interpretation suggests that travellers heading abroad must now complete additional tax formalities before departure.
This perception largely stems from references to compliance forms and reporting requirements tied to Section 420 of the law. However, experts and officials indicate that such readings are overly broad and misleading.
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Tax Clearance Rule Not For Everyone
Section 420 is designed as a targeted compliance measure, not a universal mandate. It applies only to specific cases, including individuals with pending tax liabilities, ongoing investigations, or situations requiring closer scrutiny by tax authorities.
Forms 156 and 157 are part of this framework. Form 156 is meant for individuals holding a Permanent Account Number who may need to declare their tax status before travel. Form 157 applies to those without a PAN, such as certain students or individuals without taxable income. Crucially, these are event-based requirements and are triggered only under defined circumstances.
Abhishek Kumar, Sebi RIA, clarified the situation, stating, "I don’t think so. It’s not true that every person travelling abroad after 1 April 2026 must file Form 156/157 every single time."
For the vast majority of travellers, including those flying for work, education, or leisure, there is no additional compliance burden. As long as tax records are in order and there are no pending issues, these provisions are unlikely to apply.
The twin developments highlight a shifting regulatory landscape where both AI-driven risks and evolving tax rules are demanding sharper public understanding and institutional readiness.