Digital Leadership In Tax Planning- Beyond The Textbook
The introduction of online financial services has transformed the way the finance sector of India functions. However, the effect of technology has not been limited to this sector only; it has also affected associated sectors. In this regard, a prominent example will be India's tax planning or tax filing system.
In the current scenario, almost everything related to taxation is now operated via different online processes. Therefore, it is essential to be accustomed to this changing landscape, and you can read on to get a better idea of the same.
Table of Contents
What Is Tax Planning All About?
But before we dive deep in, we need to understand what tax planning is and what all it involves?
Tax planning means the procedure to reduce tax liability. It is done by introducing deductions, benefits and tax exemptions. In India, tax planning gives the taxpayer a chance to make the best use of these liability-reducing instruments to save on the total tax payment every financial year.
How Is Tax Planning Handled Presently?
This complex affair is handled by the best accountants, chartered accountants, and lawyers. In the current system, this is all done manually via some basic software and majorly via bookkeeping.
At the same time, a point to note here is the importance of maintaining reconciliations.
Since an extensive amount of data is shared between various Tax and Regulatory Authorities, if there is any discrepancy between the various channels of reporting, then auditing is performed by both the external and internal authorities. Organizations, therefore, maintain a strong data reconciliation in various reports sent to different taxation authorities.
Expenditures are reported in the form of -
- TDS return
- Income-tax returns
- Inward GST supply under GSTR 9/9C GSTR 2A/2B and Outward supply as per GSTR 1, GSTR 3B and GSTR 9/9C
- Form 26AS
- Tax audit under section 34(a)
- The Financial Statements are required in MCA filings.
How Has Tech Been Infused Within the Tax Planning Structure?
Tax planning structure is tech-enabled these days. It is a must-have for every tax planning organization. The authorities related to Indian Tax have led the way with the use of advanced technology in tax planning.
Some of these tech-enabled taxation changes are -
- Launch of faceless assessment scheme
- Electronic filing of TDS and TCS
- GST system-generated notices
- AIS/TIS form
- Red flag reporting
- Auto-generated return
- Blocking of ITC
These changes have depicted how vigilant the taxation bodies are these days. They are constantly upgrading themselves in terms of the use of technology. This has resulted in significant evolution in digital governance and tax compliances. This approach has led to an increase in the efficient functioning of tax regulating authorities and better management of risks related to tax. This has been advantageous both in the short and long term. Those who have braced the technology for tax and finance would agree with this statement.
The Educational Setup behind Tax Planning Training Also Needs to be Upgraded
Tax planning training needs to be also upgraded if these technological changes need to be pushed in public. Otherwise, people will still feel taciturn in using these changes, and there will be several bottlenecks in incorporating tech in tax planning.
As the demand for a banking and finance career is becoming a lucrative one, a detailed course on taxation can be a part of it, be it at the graduate level or as a post-graduate specialized course.
Apart from this, the KYC and AML Certification is another way to counter this ever-increasing demand for online tax filing and planning.
To sum up, the emergence of the online taxation method has changed the way of managing this whole system. Hence, training new tax professionals in digital methods will strengthen the foundation of the nation’s taxation system.