According to a survey conducted by Deloitte India on Tuesday to determine how India Inc. views tax technology and the government’s digital initiatives, organisations are increasingly shifting towards having a technology-driven tax function as a result of the government’s push for digitalisation to make doing business easier.
According to the second edition of the Indian income tax digitalisation survey, small businesses have also paved their ways, with 81% of them seeking a technology-driven tax function within the next five years, even if larger businesses are predicted to adopt technology more quickly.
According to the report, 92% of firms have implemented technology-driven tax platforms or expect to do so within the next five years, up from fewer than 80% in 2023. “This increase reflects the increasing awareness of technology’s ability to improve efficiency, simplify compliance, and future-proof tax operations,” the poll stated.
Using primary research and an online poll of more than 250 industry professionals, the survey’s methodology sought to investigate how technology is used in tax functions across various businesses. The organization’s revenue varied from under Rs 500 crore to over Rs 6,500 crore.
Additionally, given that over 50% of firms express confidence in applying these advances, taxpayers feel at ease experimenting with cutting-edge technology like AI/ML and GenAI in their tax functions. However, the majority of respondents point to a lack of tax technology specialists and problems integrating with existing systems as obstacles to the modernisation of the tax function.
In order to handle the difficulty at their end, over 44% of respondents want to combine different training approaches to meet a range of learning requirements related to tax technology, and 27% are seeking mentorship and on-the-job training. According to taxpayers, they anticipate that the government will implement open APIs (like GST) for smooth communication and the Standard Audit File for Tax (SAF-T) for a quicker and more effective audit procedure.
Remarkably, 74% of participants anticipate that SAF-T will enable compliance monitoring and reporting in almost real-time. Furthermore, 63% of those surveyed anticipate that APIs will simplify data interchange with tax portals. According to a poll conducted by Rohinton Sidhwa, a partner at Deloitte India, 77 per cent of businesses have raised their expenditures for tax transformation and automation in FY24, up from 67 per cent the previous year. Sidhwa praised the Indian government’s announcement that it will fully digitise the remaining income tax services, such as rectifications and appellate orders, within the next two years.
