Deloitte survey: Big firms dedicate excessive time to tax compliance

The survey emphasised that simplifying reporting processes related to tax regulations would result in faster and more efficient reconciliations.

According to the the survey, large firms strongly emphasised the need for simplifying reporting requirements under tax regulations to expedite and enhance the efficiency of reconciliations.

According to a recent Deloitte survey, tax teams in large companies spend approximately 70% of their time on tax compliance tasks. The survey also highlights the need for cross-utilization of data gathered by different government agencies to streamline reporting requirements and reduce the burden on businesses.

A big challenge faced by organisations include TDS compliance, the survey said, adding simplifying reporting under tax regulations would make reconciliations quicker and more efficient.

“The disproportionate amount of time spent by tax teams on tax compliance, more so in larger organisations, is an area of concern and needs to be addressed by way of discussion between the tax administration and taxpayers,” said the Deloitte survey on Income-tax digitalisation in India.

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Tax teams in large, complex organisations, despite their enhanced use of technology in tax, spend a high proportion (around 70 per cent on average) on tax compliance.

Given the significant amount of data involved, the reconciliation of TDS data and processing/re-processing of data requires large teams to focus full-time only on TDS compliance; in light of the fact that more transactions are coming within the purview of TDS, the problem is growing in complexity, the survey said.

“Today the amount of time corporate taxpayer spends on compliance, the demand is overwhelmingly of digitalisation of compliance. There is a big burden of compliance and reporting that takes away most of their time,” Deloitte India Partner Rohinton Sidhwa said.

Two-thirds of the survey respondents and 84 per cent respondents from companies with a turnover of more than Rs 6,400 crore highlighted that reduction in the number of income tax compliance by utilising filings made by taxpayers under other regulations, including GST returns, annual return filing with MCA, and FEMA reporting, can drive tax digitalisation.

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Simplifying reporting under tax regulations, such that reconciliations are quicker and more efficient, was another key ask from respondents, especially from larger companies.

Sixty-four per cent of respondents from companies with a turnover of less than Rs 500 crore suggested streamlining TDS/TCS compliance with the help of technology, the survey said.

E-filing 2.0 has been well received by respondents across the board as pre-filled ITRs and AIS/TIS information have reduced the time spent in data collation and in errors.

The survey respondents were appreciative of the improved income tax portal for its user-friendly interface and e-documentation trail maintenance.

Companies with a turnover of Rs 500-3,000 crore appreciated computer-based scrutiny selection and speedy processing of returns and refunds.

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Faceless assessments have been appreciated the most by respondents from companies with a turnover of Rs 3,000-6,400 crore.

“Asks from taxpayers differ depending on the size of the organisation. While the asks of large organisations are for the tax administration to use filings made under other regulations and thus, simplify tax reporting, small ones seek to streamline TDS/TCS compliance,” the Deloitte survey said.

The survey has responses from 129 tax professionals, including c-suite, directors, and presidents from finance functions, general manager (finance), and vice president (finance), finance & taxation managers.

The survey was conducted across sectors, including consumer; energy resources and industries; financial services; government and public services; life science and health care; and technology, media, and telecommunications.

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Sidhwa said it is encouraging to note that 60 per cent of companies have already completed automation for transaction tax and annual tax compliance, with the remaining 40 per cent still in the process.

“We also noted that 50 per cent of the respondents attested to the advantages of data accessibility on tax portals while observing a notable decrease in time spent on compliance,” Sidhwa added.

(With agency inputs)