Large firms spend 70% of time on tax compliance, says Deloitte

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.

Tax teams at large firms spend 70% of time on average on tax compliance and want cross-utilisation of data collected by government agencies to cut down on reporting requirements, a Deloitte survey on 'Income-tax digitalisation in India' said. 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’. 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,” says, Deloitte India Partner.

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. 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 expert 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.