By Niraj Hutheesing, Founder & Managing Director, Cygnet Infotech
Over the last few years, as the discussions around financial technology (Fintech) grow stronger, taxation has often been left out of these conversations. However, this is all set to change, with Prime Minister Narendra Modi issuing a clarion call for reforms in the Indian Indirect tax system. These reforms, when implemented, will herald in the complete digitization of the compliance process, which will ensure a paperless system, besides accurate and legitimate reporting. Through a vision to create a technology centric tax system, the country is now facing the very real prospect of benefitting from reforms that are based on transparency, trust, technology, and productivity.
To this extent, going forward, we are now looking at faceless appeals, faceless e-assessment schemes (FAS), and the taxpayers’ charter that will bring in increased accountability, efficiency, and transparency in tax administration for businesses. The major impacts will be noteworthy for taxpayers who have high pool of data essentially the Industry giants. At the cusp of this revolution, some of the changes we can expect to see include:
Through periodic interventions, and real-time monitoring, we can now keep pace with performance, and gather data, which can be analyzed to help in simulation and planning
·Use of analytics to synthesize data:(productivity & transparency) With the influx of technology in revolutionizing the indirect tax reforms, we can no longer afford to carry out GST tax planning as a once-a-year exercise. Through periodic interventions, and real-time monitoring, we can now keep pace with performance, and gather data, which can be analyzed to help in simulation and planning. Additionally, by implementing a layer of analytics within functions of tax technology, this would go a long way in synthesizing data from multiple GST / VAT returns, to formulate a strategy that is both efficient, as well as transparent to help address existing industry challenges.
Owing to these changes, not only do they take forward the Indian government’s mission to reform the indirect tax administration, but also revolutionizes the concept of territorial jurisdiction. Today, the entire process can be location agnostic, and has the potential to set a global benchmark in field of compliance verification. Furthermore, eliminating the need for frequent personal interactions between the tax department and the payer, these FAS considerably reduce the chances of malfeasance, and resource wastage.
As it stands, till date, cases under FAS have typically been small in nature, and those which involved limited scrutiny. Moving forward, we can expect to see it reach its full potential when used in more complex and larger cases, where transfer-pricing assessment takes place, and reducing the need for litigation.
Similar to faceless assessments and appeals, the newly introduced taxpayer charter brings about accountability within the tax department. Not only does it ensure they make timely and accurate GST tax collection decisions, but it also respects the dignity, privacy, and time of the taxpayers. With this formally in place, India joins its global counterparts USA, New Zealand, Australia, Canada, France, and South Africa in providing a transparent, fair, and efficient tax system that’s at the vanguard of financial revolution in the country.