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Digital: The Taxpayer’s Panacea

The Tax Technology Summit provided opportunities to learn about digital disruption in tax function and gain strategic insights

Updated: Sep 06, 2019, 04.31 PM IST
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(L-R) Prakash Kumar, CEO, GSTN, Rahul Patni, Digital Tax Leader, EY India and Sanjeev Singh, Commissioner of Income Tax
From leveraging automation to understanding best practices and business operating models, the Tax Technology Summit provided opportunities to learn about digital disruption in tax function and gain strategic insights

With the CEO of GSTN (Prakash Kumar) and the Commissioner of Income Tax (Sanjeev Singh) around, there were bound to be some questions tailored for them. Together the duo took a flurry of questions from the moderator, Rahul Patni, Digital Tax Leader, EY India and the audience — about radical changes in the audit ecosystem, data mining and sharing, digital processes in the tax function, and their take on new services and projects.
Edited excerpts: On services and new projects

Sanjeev Singh: There are two focus areas – CPC 2.0 (pre-filling of ITRs by the Income-tax Department and its acceptance by the taxpayer to improve accuracy of information and drastically reduce the existing turnaround time taken in processing of returns and issuance of refunds); and defect free processing.

We are looking at how we can make it accurate and reduce the turnaround time from 8-10 days to within the same day. In addition, we are using all methods including social media to create awareness of the services.

On use of blockchain in taxes

Sanjeev Singh: We have done a few POCs on the TDS site, but as of now we don’t see a compelling reason to use Blockchain.

Prakash Kumar: In case of land registries, Blockchain is relevant because it goes through multiple channels and repetition is possible. But with taxation, I haven’t found a good use case of Blockchain.

On increase in disclosure requirements

Sanjeev Singh: Our idea behind collecting more data points in tax returns is to make selection of cases for scrutiny more intelligent, make specific enquiries and thereby, contributing to ease of doing business.

On collaboration between the CBDT and GSTN

Prakash Kumar: We are working with CBDT to see that there is consistency in data reported by tax payers across two different taxation regimes

Sanjeev Singh: Accessing information across agencies to make near real time analysis of transactions and alerting taxpayers about their obligations is one of key priorities of CBDT

On convergence of compliances and positions between direct and indirect taxes

Prakash Kumar: In principle, it sounds like a logical thing. However, considering the stage where we are, it will need time.

Sanjeev Singh: Agree that areas like customs valuation and transfer pricing are topics based on common principles. However, in order to reach a stage of common compliances for direct and indirect taxes, it needs change in law and can happen in long term.

On e-assessments

Sanjeev Singh: Earlier, e-assessment was primarily the communications -- meaning submissions and responses were electronic. And what we are doing now is a very radical change – the tax payer wouldn’t know who the assessing officer is. Also, we are working on making the data structured from the very beginning, easing the workload of both the payer and the assessor.

On e-Invoicing

Prakash Kumar: Invoices are the basic building block and our mandate is also to create a structure where people share more invoices. We are going to start e-invoicing from January 2020 (initially on voluntary basis) and then the government will see the response and consider future course of action.

Also, we have put a standard invoicing template on public domain, which will help standardise the entire process and reduce the human error factor.

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Moving Up The Ladder


As businesses become more agile, they need to look at different approaches to working models. Compliance with regulations takes away a good chunk of a business’ time and energy. That is the reason why most organisations are depending on technology to ease the process of compliance. In addition, the leaders in the panel discussion believed that while compliance is critical, tax functions also need to prioritise the focus areas. The panel also discussed about areas for investment – such as automation of routine processes – so as to free up the tax function’s time to focus on making tax more of a strategic front-end function working alongside the customers and business.

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Reimagining Your Tax Function

How relevant is technology for tax teams of companies?

It is as relevant as in any other progressive field. Tax compliances are expected to capture extremely granular transaction level data. Also, with faceless tax assessments, data will need to speak for itself. Without well-organized data and sophisticated technology tools, large companies cannot meet these asks (both internal and external).

What is the correlation between tax technology and tax function outsourcing?

When you have a problem, you either solve it yourself or hand it over to an expert to get results. A lot of companies don’t have the bandwidth or expertise to undertake tax technology transformation inhouse. Outsourcing brings along effective risk management through greater transparency and better access to data, as also lower-cost resources and state-ofthe-art technologies.

Have companies started reacting to this wave of change in tax?

Companies are already convinced that the change is inevitable. Each tax function is in a different phase of their immersion journey with some undergoing fullscale transformation, while others adopting it in parts.

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Bridging The Trust Deficit

Given today’s dynamic shifts in global regulations and technology, the tax authorities, and organisations must work at double pace to stay abreast with developments. In India, with the introduction of digital processes by the government, companies are being pushed to increase transparency.

At a panel discussion at the Tax Technology Summit, Tim Steel, EMEIA Tax and Finance Operate Leader, EY, gave a global perspective: “Digital tax admin has changed the way businesses work. It’s accelerating around the world in different ways.

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For example, SII (Immediate Supply of Information on VAT) in Spain requires to report transactional data four days after its happened.” He explained that this change requires different skillsets and world over, recruitment is now being done differently. He said: “The UK has recruited a whole new team of data scientists under the tax function to start analysing the data.”

Adding to Steel’s recruitment sentiment, Dave Helmer, Global Tax and Finance Operate Leader, EY, said: “According to a survey, significant majority of organisations said that the core competency of the tax professionals is changing from tactical to technical plus digital, analytical, data and automation. And finding the right skillset is becoming a challenge.”

The discussion then shifted to data mining, vigilance and compliance. Leaders believe that digital evolution has provided the opportunity to bridge the trust deficit between the government and the tax payer.

V.S. Krishnan, Partner & National Leader, Tax & Economic Policy Group, EY India, said, “This has helped us reduce the physical interface between the tax payer and the government, and a series of measures have helped this — e-filing, e-assessments etc. And world over, it’s observed that greater trust leads to greater compliance.”

GST triggered enormous amount of data, creating an opportunity for the government to mine it. The tax department is now using this data to create a risk profile.

HOT TOPIC

“Discover how robotic process automation is defining the new ways of working for tax”
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There will be a shift of measure from cost to value: Currently, 60-70 per cent of time is spent on transactional data. A very small percentage is spent on analysis and shared services. But this will undergo a complete reversal in the next two years – with automation, analysis taking prime role RPA is a low-risk technology that can be integrated into an existing IT infrastructure, allowing creation of a platform to introduce more sophisticated algorithms and machine-learning tools.

“Tax Function – the future operating model” “leveraging technology in GST compliances”
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Investing in technology and having a blue print that is sustainable and future-proof is hard. A good way is to look at the culture around cost, value and risk, and determine where you want to be best in class, real high-value and best in cost.

Tax functions must constantly evolve and re-skill to thrive in this transforming ecosystem. To leverage technology/ expertise and avoid re-inventing the wheel, outsourcing and co-sourcing arrangements are emerging as new operating models of choice.

“Leveraging Technology In GST Compliances”
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New GSTR Norms and compliance workflow: ANX – 1 is expected to be near real time, and after recipient’s acceptance, data will be available soon after. The cut-off for recipient to see the invoices is 10th of the subsequent month. Unlike GSTR – 1, there will be no sign and file. With new norms, credit reversal will be overnight.

Tax liability will be computed by government portal. But there needs to be greater discipline during transition in matching the invoice and availing ITC.

Also Read

Faceless e-assessment scheme for taxpayers launched

I-T dept has to quote DIN to taxpayer

I-T dept has to quote DIN to taxpayer

Officials told to build trust with taxpayers

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