In the tax space, governments have taken the lead in digital tax administration, but the corporate sector remains focused on Goods and Services Tax (“GST”) filing as a key technology enabler. However, globally and some companies in India have had a head start in implementing technology beyond his GST filing in their tax departments.
The need for technology and automation in tax
There is an urgent need to enable technology within the tax function for the following reasons:
- Highly digitalized tax administration in India. For example, tax authorities can apply data analytics to compare huge datasets of her GST returns for buyers and sellers.
- Companies need to manage their tax functions more efficiently. For example, multiple entities and multiple tax procedures, along with a declining tax team, make the use of technology critical.When
- Minimize the risks caused by inaccuracies when manually processing large amounts of data. For example, it is difficult to verify the withholding tax rate (TDS) of dividends paid to hundreds of thousands of different types of shareholders.
Four Areas for Adopting Tax Technology
The areas of technology adoption in tax are summarized below.
- Automate tax data reconciliation and processing as tax and finance teams spend significant time processing ERP data and spreadsheets from multiple systems for tax compliance, statutory and internal reporting and reconciliation There is considerable room for
For example, tax reconciliation can be automated internally or externally
Automated reports generated using appropriate tax and technical skills – Automating Clause 34a tax audit reports related to TDS within an ERP is a typical case and can result in efficiency and accuracy .
- Additionally, digital tax governance overcomes the challenge that tax and finance leaders do not have sufficient visibility into critical areas such as tax and litigation situations, tax refunds, tax losses, and adequacy of tax provisions. has become essential for and compliance management tools, tax and finance leaders gain greater visibility and control over tax litigation and compliance, with innovative smart alerts for upcoming deadlines and tax hearings. For his GST audit at Anvil, proactive preparation by collating and maintaining backup data and documents in digital repositories is equally important.
In fact, implementing such litigation and compliance management technology in a SaaS model (software as a service) minimizes the cost of ownership by reducing the cost of creating and maintaining IT infrastructure.
- Using data analytics to gather insights from tax data helps tax and finance leaders proactively identify inaccuracies, discrepancies, and omissions at the transaction level and act on such data insights. is another area that helps improve the tax process.
Using data analysis technology on your GST and ERP data can help you drill down into some purchase and sale exceptions. Sales invoices for services provided abroad to customers with GST. Purchase invoices for materials with different tax rates.
Adopting technology that facilitates 26AS reconciliation of TDS and withholding tax (TCS) can also greatly help digitize the process. Such technology is an erroneous TDS/
Entries by customers and suppliers, respectively.
- Companies with high volumes of transactions often have to spend considerable time on repetitive tax-related manual tasks for such a large number of tasks. Robotic process automation (RPA) or bots are process automation software that can significantly reduce the time tax teams spend on such activities. It can perform a large number of repetitive manual actions in various applications, such as reading documents and his website, or create digital registers of thousands of items of data in the required format. An example would be reading multiple lines of data from thousands of airline invoices and creating a digital register for claiming GST input tax credits. All this with minimal operating costs.
Way forward
“Off-the-shelf” tax technology tools can help address some of the challenges above, such as tax governance, but our experience is that in areas such as tax data processing, tax reconciliation, and data processing, sophisticated shows the need to implement customizable technology and automation. Solution for the following reasons:
- Differences in each organization’s data environment and data recording methods.When
- Expected output fluctuations.
The first step is to understand the different tax processes where technology interventions add value, and the second step is to ensure that technology in the identified tax processes achieves the desired value. Some large organizations are also enabling technology in their tax processes through managed tax services (organizations are reluctant to invest in or maintain technology due to changes in laws and regulations).
One caveat when assessing value added and benefits is to focus on improving the accuracy and processes of the tax department, rather than just assessing costs. stage.
The author is a partner at Tax Technology & Transformation Head of KPMG in India.
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