Tax Technology Outlook For 2021
Even though conversations around Fintech and its advantages have been doing the rounds for a while now, it's only during the last few months, that these have increased. Fueled by the need for digital transformation of sectors, hyper automation particularly in the tax technology space has been one of the buzzwords of the year. In tandem with Prime Minister Narendra Modi's appeal for reforms in the Indian taxation system, we are now at the cusp of a revolution that will be defined by technology.
Recently, there has been an emergence of procurement to payment, vendor invoice, and audit reconciliation, and credit assessment tools for banks and NBFCs, along with GST compliance platforms
Hyper automation, which will drive tax technology, at its very core brings together multiple components of automation technologies and tools that enables greater automation of work. Through this, taxpayers can benefit from faceless e-assessment schemes (FAS), faceless appeals, and the taxpayers' charter that will result in increased transparency, efficiency, and accountability.
Driving the process of hyper automation, digital twins can be used across processes such as Order to Cash, Procure to Pay, Record to report, and Machine to Machine to name a few. What this seemingly futuristic technology does is creates opportunities for decision modelling which are based on AI derived inputs, machine learning tools, and stream analytics.
The Need For A Digital Twin In Tax Processes
Recently, there has been an emergence of procurement to payment, vendor invoice, and audit reconciliation, and credit assessment tools for banks and NBFCs, along with GST compliance platforms. With hyper-automation having taken over the GST accounting system, and continued developments taking place at a rapid pace, soon, this automation and digital transformation will make its presence felt across all processes in the domain. And by creating this layer across the organization, the Digital Twin of the Organization (DTO) will showcase an overview of the wear and tear in the processes that require automation. In the long run, this will go a long way in limiting penalties while auditing.
An important factor to keep in mind about digital twins in the tax space, is that the sooner these are implemented or adopted, the quicker its benefits are visible. Simply put, the earlier a company digitizes its operations, the sooner AI can work with it to deliver solutions that can be implemented to increase business efficiency.
In recent times, during the pandemic, cash recovery is a major focus for most businesses, the implementation of tax technology assists businesses to digitally process the voluminous data. Machine learning (ML) tools that are powered by Artificial Intelligence (AI) systems will create a system wherein real time decisions can be made with ease. The new system of data analysis will be crucial in enabling businesses to discover new opportunities for tax saving and recovery.
This is of course, the long term vision. Before companies can get to this stage, there needs to be increased and consistent awareness about how hyper-automation can be beneficial in tax planning and forecasting.
The Early Mover Advantage
At the start of the New Year, we already know that this year will be defined by tax technology, which forms the bedrock for transparency, productivity, and trust within the ecosystem. Just as with faceless appeals and assessments, the newly introduced taxpayer charter brings about accountability within the tax department. Contrary to previous years, going forward as more transactions will be accounted for in the cloud, and with the increase in shared information, tax professionals will be greatly impacted. However, with the early adoption of digital twins within the organization, they can expect to create a well oiled machine. Once formally set up, and implemented across the country, India will join its global counterparts in ensuring a technology powered tax system that is fair, efficient, and impactful for the years to come.