Large Companies Spend Overwhelming Amount Of Time On Tax Compliance: Deloitte Survey

Tax teams at large companies spend around 70% of their time on average on tax compliance and want cross-utilisation of data collected by various government agencies to cut down on reporting requirements, a Deloitte survey said on Tuesday.

A big challenge faced by organisations includes TDS compliance, the survey said, adding that 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% on average) on tax compliance.

Given the significant amount of data involved, the reconciliation of TDS data and the processing or 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% of respondents from companies with a turnover of more than Rs 6,400 crore highlighted that reducing the number of income tax compliances by utilising filings made by taxpayers under other regulations, including GST returns, annual return filing with MCA, and FEMA reporting, can drive tax digitalisation.

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

According to the survey, 64% of respondents from companies with a turnover of less than Rs 500 crore suggested streamlining TDS and TCS compliance with the help of technology.

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 on data collation and 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.

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 managers (finance), vice presidents (finance), and finance and 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.

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

"We also noted that 50% 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.