Most CFOs in India see GenAI boosting tax function efficiency: Report

Most of the CFOs as well as finance and tax leaders in India believe generative AI (GenAI) will significantly enhance the effectiveness of their tax functions, said a study on Thursday.

Globally, 87 per cent of leaders echo this sentiment, underscoring GenAI's potential to revolutionize tax functions worldwide, said a EY Tax and Finance Operations (TFO) Survey 2024.

Based on insights from 1,600 leaders across 32 countries and 18 industries, including 70 CFOs and tax leaders of leading Indian corporates, the global survey highlighted key challenges in the tax and finance domain.

It said, "94 per cent of CFOs and finance and tax leaders in India believe generative AI (GenAI) will significantly enhance the effectiveness of their tax functions a remarkable increase from just 19 per cent in 2023, highlighting a growing recognition of GenAI's potential in the tax landscape."  The survey 2024 also showed that Indian tax leaders have already begun to make strides in their GenAI journey, with 14 per cent actively developing strategies, launching pilot projects, and exploring early-stage Gen AI applications.

Another 47 per cent are in the exploratory phase, investigating and experimenting with GenAI's potential to enhance their operations, surpassing the global average of 40 per cent.

Rahul Patni, Digital Tax Leader, EY India, said that GenAI is clearly emerging as an effective tool for tax professionals to transform their workspaces and professional lives.

"Areas of application can range from AI assisted document reviews to data cleansing and drafting business deliverables for day-to-day matters. This will allow them to work more effectively, focus on strategic priorities, and make better decisions," Patni said.

The survey further said 44 per cent of respondents cited lack of skilled talent and limited understanding of GenAI's capabilities as major barriers.

It also found that 46 per cent of respondents in India (and 45 per cent globally) spend their time on routine tasks like data collection and tax return preparation, which Indian tax leaders believe should take not more than 20-25 per cent of their time, allowing for a greater focus on strategic initiatives.

Jitesh Bansal, National Leader, Tax and Finance Operate, EY India, said that as regulatory and reporting burdens grow, tax and finance functions face increasing strain.

"Tax teams in companies will need to step out of their comfort zones and start addressing newer problems around tax function strategy, processes, data quality, audit readiness and so on," Bansal said.

In the context of shift in ways of working, the survey highlighted a trend of tax skills being complemented very well by data and technology skills.

However, there is extreme talent pressure witnessed at the same time.