 "74% top corporate taxpayers favour real-time compliance monitoring: Report")
Three-quarter, or 74 per cent, of high-end corporate taxpayers in India are in favour of the Income Tax (I-T) department enabling near real-time reporting and compliance monitoring, a recent survey by Deloitte India revealed on Tuesday.
The Income Tax Digitalisation in India survey, which studied around 250 of the country's highest corporate taxpayers, highlights the growing demand for technology-driven solutions within the tax compliance process.
Deloitte's survey found a clear trend toward the increasing digitalisation of India's tax landscape, with a strong push for the use of real-time data, e-wallets, APIs, and emerging technologies like AI and blockchain. Key findings from the survey include:
Near real-time reporting
The majority of respondents (74 per cent) expressed a desire for the tax department to facilitate near real-time reporting. This would allow businesses to stay updated on their compliance status and make adjustments more promptly.
Tax e-wallets for faster refunds
A majority of 67 per cent of businesses said they would benefit from tax e-wallets that could instantly credit refunds following the passing of orders. These refunds could then be adjusted against outstanding tax demands or future liabilities, speeding up cash flow management.
Standard audit file for tax (SAF-T)
Respondents also pushed for the adoption of the SAF-T, a digital tool that would allow for near real-time reporting and compliance monitoring, thus improving the overall efficiency of the tax process.
APIs for seamless connectivity
Majority of businesses (63 per cent) believe that opening up automated programming interfaces (APIs) would enable seamless connectivity with the Income Tax portals, making compliance more efficient. With open APIs, taxpayers could fetch relevant data directly from government portals.
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Emerging technologies in tax functions
About 57 per cent of the respondents expect the government to adopt emerging technologies such as blockchain and artificial intelligence (AI) to enhance tax administration and improve compliance processes.
Deloitte India’s partner, Rohinton Sidhwa, stated that the survey shows the increasing recognition of the need for a robust, technology-driven tax ecosystem. In FY24, 77 per cent of companies reported increasing their budgets for tax transformation and automation, up from 67 per cent the previous year.
"The adoption of advanced technologies such as Robotic Process Automation (RPA), blockchain, Generative AI (GenAI), machine learning, and data integration tools is accelerating the digital transformation of tax functions," Sidhwa said.
Adoption of tax technology tools
The use of third-party tax software and cloud-based solutions has seen significant growth. According to the survey, 69 per cent of companies are now using these tools, up from 57 per cent in 2023. This indicates a growing commitment to embracing digital solutions for tax-related tasks.
Challenges in tax digitalisation
Despite the progress, businesses still face several hurdles in their transition to a digital tax environment. The key challenges identified include:
- Lack of Skilled Tax technology professionals: There is a shortage of professionals with the expertise needed to manage and implement tax technology solutions effectively.
- Resistance to new technologies: Some businesses are hesitant to adopt new technologies due to the perceived complexity or potential disruption to existing systems.
- Integration issues: Many companies face difficulties in integrating their existing tax systems with new third-party solutions or government portals, further complicating the digitalisation process.
These challenges highlight the need for additional resources and support to help businesses transition smoothly to a more digitalised tax system.