INDORE INSTITUTE OF LAW

(AFFILIATED TO D.A.V.V. & BAR COUNCIL OF INDIA)

Taxation Law
TOPIC: How Is Technology Influencing Various
Dimensions Of Taxation Process

SUBMITTED BY:

Srishti Mukherjee

B.A.LL.B | 9th SEMESTER | 5th YEAR

SUBMITTED TO:

Asst. Prof. Shweta Singh

ACADEMIC SESSION

2022-23

Date of Submission: 12/11/2022

1
 CERTIFICATE

THIS IS TO CERTIFY THAT SRISHTI MUKHERJEE OF B.A.LL.B | 9TH SEMESTER |

5TH YEAR HAS SUCCESSFULLY COMPLETED THE RESEARCH WORK IN HOW IS
TECHNOLOGY INFLUENCING VARIOUS DIMENTIONS OF TAXATION
PROCESS PARTIAL FULFILMENT OF REQUIREMENTS FOR THE KNOWLEDGE OF
GIVEN BY ASST. PROF. AAKRITI SHUKLA MA’AM PRESCRIBED BY INDORE
INSTITUTE OF LAW.

THIS ASSIGNMENT IS THE RECORD OF AUTHENTIC WORK CARRIED OUT

DURING THE ACADEMIC YEAR 2022-23.

TEACHER’S SIGNATURE -----------------------------------------

DATE: 12/11/22

2
 DECLARATION

I HEREBY DECLARE THAT THE PROJECT WORK ENTITLED “HOW IS

TECHNOLOGY INFLUENCING VARIOUS DIMENTIONS OF TAXATION
PROCESS ” SUBMITTED FOR FULFILLING THE ESSENTIAL CRITERIA OF INDORE
INSTITUTE OF LAW, IS A RECORD OF AN ORIGINAL WORK DONE BY ME UNDER
THE GUIDANCE OF ASST. PROF. AAKRITI SHUKLA MA’AM IN OF B.A.LL.B | 9TH
SEMESTER | 5TH YEAR, INDORE INSTITUTE OF LAW FOR THE ACADEMIC
SESSION 2022-23.

SRISHTI MUKHERJEE

B.A.LL.B

9TH SEMESTER | 5TH YEAR

3
 ACKNOWLEDGEMENT

I, SRISHTI MUKHERJEE STUDENT OF B.A.LL.B | 9TH SEMESTER | 5TH YEAR

WOULD LIKE TO EXPRESS MY SPECIAL THANKS OF GRATITUDE TO MY
PROFESSOR AND GUIDE ASST. PROF. AAKRITI SHUKLA WHO GAVE US THE
GOLDEN OPPORTUNITY TO DO THIS WONDERFUL ASSIGNMENT ON THE TOPICS
HOW IS TECHNOLOGY INFLUENCING VARIOUS DIMENTIONS OF TAXATION
PROCESS. I AM SINCERELY GRATEFUL TO MY TEACHER FOR GUIDING US AND
PROVIDING THE RELEVANT INFORMATION AND THUS HELPING ME TO
COMPLETE THE PROJECT SUCCESSFULLY. I WOULD ALSO LIKE TO GIVE A
HEARTY THANKS TO MY PARENTS WHO SUPPORTED ME MORALLY AS WELL
AS ECONOMICALLY IN COMPLETION OF THIS ASSIGNMENT WITHOUT ANY
TYPE OF PROBLEM. I WOULD LIKE TO APPRECIATE AND THANK ALL MY
FRIENDS AND ALMA MATES FOR HELPING ME IN EVERY POSSIBLE MANNER IN
THE WAY OF COMPLETION OF MY PROJECT. LAST BUT NOT THE LEAST I WANT
TO THANK THE ALMIGHTY WHO MADE EVERYTHING POSSIBLE.

4
 Table of Contents

Abstract ...................................................................................................................................... 6

Introduction: ............................................................................................................................... 7

Tax Technology: ........................................................................................................................ 7

The Trends Affecting Digital Tax Administration And Tax Functions: ................................... 7

Indian Tax Authorities (Governmental Approach) .................................................................... 8

Some Technological Advancements In India: ........................................................................... 8

As per the survey of EY TaxTech India 2016:....................................................................... 8

Some Global Implications Are: ................................................................................................. 8

This technical platform helps us in many ways: .................................................................... 9

SOME GLOBAL IMPLICATIONS ARE: ................................................................................ 9

Importance Of Technological Advancements In The Taxation Process ................................. 10

Technological Advancements In Tax: A Necessity Shaped Into An Opportunity .................. 10

Important Data: .................................................................................................................... 11

Advantages Of Technological Advancements: ........................................................................ 11

Challenges / Demerits Related To Use Of Technological Advancement In Taxation Process:

.................................................................................................................................................. 12

Future With Technical Advancements: ................................................................................... 12

Role Of Tax Consultants:......................................................................................................... 13

Suggestions: ............................................................................................................................. 13

Conclusion ............................................................................................................................... 13

5
Abstract
The tax landscape has been changing drastically together with tax payers and tax authorities
looking ahead for more technological advancement and innovation in the field of taxation
system which is basically used in order to make the taxation process more effective and
relevant. The technological advancement in the various dimensions of taxation process has led
to a great influence and impact and can be considered as the next wave in business
transformation.

It is believed that the fourth Industrial revolution is more of a technological expansion. The
technological advancement has led to an evolving role for stakeholders involving businesses,
tax consultants etc. The tax authorities also use the power of these technologies like big data to
improve tax administration, facilitate tax payer by e filing and many other facilities. This
drastic change has been also keenly observed due to the lockdown where the technology was
used extensively for better and effective functioning.

India has been said on top of technological advancements in upbringing the tax technology
solutions to the country. In layman's language tax technology is referred as technological
solutions in catering tax. This research paper will deal with the importance the implications of
recent development based on some data with respect to other countries followed by pros and
cons and challenges being faced along with remedies to rectify followed by conclusion.

6
Introduction:
During this era of modernization the technologies have taken a pace in almost every field in
current world. The wide spread of technological advancement has also affected the tax function
in a very higher pace. Tax administration been digitalized has been emerging as a
transformation in the business in a large scale since year 2017, being GST as one of the tax
reform which is technologically led.

Now a days tax authorities not even in India but also worldwide introduce new tax laws in
order to deal with the digitialized business models and tackle issues related to disclosure of
transparency and seamless exchange of taxpayer information between authorities.
Technologies these days address the changing requirements related to tax administrations and
business with more efficiency and accuracy, which will directly or indirectly help the tax
technology in order to mature and grow at a greater pace.

Tax Technology:
Technology is playing a vital role in all the businesses at every field along with
tax,rapidly.Technological solutions which cater tax is defined as tax technology. People every
day expect a newer and a better technology which started with the introduction of robotic
process automation and goes upto 5 G bots and never ending list of the technological
advancements.

This has been a new concept but highly appreciable within a short span because of its
significant benefits been provided to the tax consultants, enterprises, government including
stakeholders too. The tax authorities basically began with the IT enabled e filing of returns,
dealing with the digital technologies related to submission of source data.

Mainly technology is needed when the government use the submitted source data in order to
assess tax where the tax forms are required no more. Digitalized technologies are basically
used in generic sense in matching data from other sources, generating e audit assessments and
analyzing the tax payers across.

The Trends Affecting Digital Tax Administration And Tax Functions:

• Tax authorities getting digitalized and technically advanced being IT enabled.
• Emerging new technologies which is considered as helpful in adoption of several digital
tax policies being transformed.
• Bringing and amending legislative landscape in order to increase the demand in
transparency in the tax administrations.

7
Indian Tax Authorities (Governmental Approach)
The Indian tax authorities are also IT equipped.They have also helped the tax payers in filling
the form online, doing the registrations, e payment of taxes, e filing of tax returns,
reconciliation and e viewing of tax credits, refund by authorities. Because of the digitally
equipped the tax payer are given the choice in order to participate in tax assessment online and
saving time by not visiting the tax office offline,thus pacing up the speed.

The Government also leverage digital platforms in order to assess the taxpayer data. Not only
this Goods and Services Tax for the indirect tax are been administered online.The IT systems
are being used as risk management tool to pick up the returns for scrutiny as per the case of
customs.

Some Technological Advancements In India:

The gap between the current scenario and the expected technology state related to
implementing the tax functions was shown in the EY TaxTech India Survey 2016.To have a
tax technology strategy is a necessity in the digital world for the business organizations. Here
businesses have to have the strategy in order to have a clear overview of business insights
which can help in increasing governance and business dealing with the tax authorities.

Presently, basic software like standalone etc are being working these days as are considered as
non integrated tax software.Due to the lack of integration the tax department faces a lot of
problems on manual working.

As per the survey of EY TaxTech India 2016:

• Around 45% of business organizations use the infrastructure that is basic for
consolidation and tax accounting.
• Over 90 % voted related to non automation or partly automated tax reporting
compliance system
• Around 24% business organizations use no integration ERP system as for tax software.1

Some Global Implications Are:

The IT equipped platform of Goods and Services Tax Network (GSTN) acts a common
platform related to registration, e filing.It helps in providing IT infrastructure to all

1
Get set for the tax function of the future EY TaxTech Survey 2016, EY report, November 2016.

8
stakeholders. Basically GST portal helps in integrating tax administration systems within
centre and states.

This technical platform helps us in many ways:

• Helps in understanding the analytical methods related to analysis and linkage of
unstructured and structured data.
• Helps in diagnostic analytics, descriptive analytics
• Includes a collaborative approach related to knowledge and information sharing etc.

The Ministry of Corporate Affairs (MCA) and the Central Board of Direct Taxes (CBDT) as
per an agreement share information such as tax return, PAN details. Financial statements filed
in Registrar of Companies will also be shared along with bank related financial transaction.2

The CBDT announced the limited scrutiny, complete scrutiny and manual scrutiny which are
related to computer aided scrutiny selection for the assessment of return cases that require
scrutiny in July 2017.

There was an increase been noticed at GST revenue collection from October 2020.

In order to bring the class tax technology solutions for the private firms India is considered to
be on the top.Covid 19 has also played a crucial role in adapting the technological solutions as
it helped in working remotely by using digitalization being in home in lockdown and use the
technology in order to work effectively and smoothly.

GST annual returns, assessments, were not obstructed because of the B2C business to consumer
code due to which departmental audits of GST were not hindered in any way which have all
been possible because of the technological advanced platform of GSTN.

Because of the cloud based solutions deployment,maintenance cost has been low where
transparency with tax authorities have become more paramount.

SOME GLOBAL IMPLICATIONS ARE:

According to EU and Latin American countries, India has also started its e -invoicing. Indian
market has also brought several technological solutions like generation of e-invoices,e-way
bills.

2
MOU between the Ministry of Corporate Affairs and Central Board of Direct Taxes (CBDT) for Automatic
and Regular Exchange of Information," Press Information Bureau,
http://pib.nic.in/newsite/PrintRelease.aspx?relid=170769, accessed 5 Oct 2017.

9
A digital VAT reporting system is being launched in order to file requirements and also takes
the digitally submitted copies if invoices.

VAT of the Gulf Cooperation Council was added to the list where taxes are being made digital
which helps in accelerating taxation in digitalized form.

The UK VAT was being changed because of the MAKING TAX DIGITAL drive which helps
in making a seamless journey related to VAT businesses from 1st April 2021.

Importance Of Technological Advancements In The Taxation Process

There has been a wide impact of technological use in the business circle as well as financial
sector because of the use of the ERP systems which help in efficiency and increasing the
accuracy of it.the use of technology also helps in dealing with competition and achieving
heights than the less technical business organizations.

It will be so difficult even to imagine the business growing without technology as it is not
manually possible to keep the internal reports or bulks of statutory filings.

There is no doubt that the technological advancement have made the life easier as well as
increased the pace of working effectively because of the IT equipped ERP platforms etc.

Technological Advancements In Tax: A Necessity Shaped Into An

Opportunity
Because of the Technological advancements the Indian tax authorities had many recent changes
with respect to transparency and disclosure like filing of invoice level in GST. There are several
ways where government are trying to have a way in order to interact related to operational data,
finance etc.Many companies have been giving high weightage on taxes transparency by global
companies.

In other ways it can be said that power of digital is being used in order to improve the
administration of tax and taxation process by facilitating tax payer compliance and counter
fraud. Technology act as the major necessity in order to survive in the new world. It can be
grabbed by young entrepreneurs as opportunities in order to fulfill tax functions in order to
achieve more heights in their business.

India has been using the technological advancement as an opportunity in order to expand the
norm of sharing the information related to tax to other countries on digital platform. India has

10
been signing certain treaties and Tax Information Exchange Agreement (TIEAs)in order to
cooperate in the norm of bringing transparency by exchanging the tax related information.

Since living with the technology is what is demanded in the current world.

Thus Indian Tax Authorities have been taken it as an opportunity by introducing several
changes in its taxation process like:

• Disclosure of more information in income tax filing

• Linking of Aadhar and PAN on some specific transactions
• Financial Statements Transactions been used instead of Annual Information Return
• For documentation purpose three tier TP is required.

Important Data:
1. Around 6,754,000 were identified by CBDT related to the non filers but with potential
tax liability during the year 2016-20173
2. Approximately 90 % as an enabler are thankful for the technology and its advancements
3. Technology being an important factor was acknowledged by 84% of the people which
are considered in effective working in taxation process
4. A list of the defaulters were being published by the CBDT for not filling the tax
recovery in public domain. It was also suggested that after the due notice the defaulters
will be blocked and will not be able to file for tax returns.4
5. There were 70 % of the people who kept on reworking related to data of finance in
order to be used in by tax authorities.
6. There was a growth recorded by Finance Ministry in net indirect tax collection of
approximately 12.3% in the financial year 2020-2021.
7. In the financial year of 2020-2021 estimates of 108.2% related to indirect taxes were
being achieved and recorded.

Advantages Of Technological Advancements:

• Acts as a risk management tool along with it the protection of the firm's reputation.

3
Income Tax Department Identifies 67.54 lakh Potential Non-Filers for F.Y. 2014-15," Press Information
Bureau, http://pib.nic.in/ newsite/PrintRelease.aspx?relid=155757, accessed 27 Sept 2017.
4
CBDT's Central Action Plan 2016-17,"
http://www.taxsutra.com/sites/taxsutra.com/files/webform/Central%20action%20plan%20 2016.pdf, accessed
27 Sept 2017

11
 • It can be of help in costs related to investment and licensing with the help of technology.
• It enables the taxation process to work in a more efficient way.
• Helps in creating better strategies which will be helpful for tax professionals with
optimum use of resources
• Helps in wasting less time in assembling data along with generating revenue in that
precious time by cutting off the costs.

Challenges / Demerits Related To Use Of Technological Advancement In

Taxation Process:
• The technical things cannot be understood without proper training because of which
excess time gets waste.
• It is a bit difficult to locate and manage documents and its final versions.
• The main challenge is when we need to translate the data in a common data that comes
from multiples sources.5
• There is seem to be inconsistency in the diverse fillings of tax in multiple jurisdictions.

Future With Technical Advancements:

The future prospective of introducing technological advancements are planned to be in the
areas of taxation process in the field of litigation management, documentation management,
data collection, process control and workflow in the tax function, support for data and Tax
process compliances along with the handling of reports.

The Income Tax Department is working on a new system of jurisdiction-free assessment (pilot
underway), where a taxpayer would be assessed by a taxman based in any part of the country.
This would further facilitate easier electronic communication between the Income Tax
department and taxpayers.

Because of the technological advancements we all know that it had impacted at a wider pace
and also in the future will. Because of the technological advancements in the future we can see
the transformations in the assessments quality wise, Officers assessing the profile of taxpayers,
sharing of information mutually between the IT database and GSTN along with reconciliation
with GST of several new forms.

5
OECD (2019a),Addressing the Tax Challenges Arising from Digitalisation, OECD.

12
Role Of Tax Consultants:
There are certain new technologies been into existence like RPA are considered to be helpful
and also technologies with AI have several emerging scope and possibilities.The more usage
of technology will help in transforming the taxation process thus speeding up the pace as well
as the higher expectations of the business reducing risk and improving and managing
effectively and in a better way. Several companies also plan to handle the outsource or in house
via manageable service provider.

Suggestions:
• The business organizations can get the solutions based on analytics based on real time
informed decision in order to gain insights from the data generated through internal as
well as external sources.
• The tax data which is integrated can help in optimizing taxation as well as accounting
process.
• There can be more clarity in the controls and roles and responsibilities been created.
• Integrated ERP systems can be used in order to analyze the data which are tax related
from various sources and generalize using automated tool at a single source.
• As said using cloud based apps will also help enterprises in standardizing the tax
process and creating a audit trail based on the consolidated tax disclosures as well as
source data.
• The inefficiencies and risk will also be less which were earlier linked with the use of
spreadsheets because of the use of improved consolidation of data which will directly
or indirectly help in working effectively and efficiently.

Conclusion:
Because of the technological advancements there is no doubt in saying that there has been a
good quality change in audits and its manner of taxation process. Also, government helps in
getting digitalized platforms in order to assess the taxpayer data by analyzing and sharing the
information to the other sources.

If we look around traditional tax function operating models have changed a lot and needs to be
changed rapidly in order to tackle the inquiries and obstacles of audits.

In India as well, the technology led reforms have played a positive role in the field of both
direct and indirect taxes.Also because of the IT database there is seen an increased
collaboration between various agencies, government which have impacted a lot in such a way

13
that the change is been clearly seen in exchanging of information via technical means, IT
equipped databases, automated tools.

Bibliography:
Pdfs:
https://assets.kpmg/content/dam/kpmg/au/pdf/2017/tax-technology-now-and-the-future.pdf
https://www.oecd.org/going-digital/tax-and-digitalisation.pdf
https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/digital/ey-tax-technology-
transformation.pdf
Websites:
https://www.internationaltaxreview.com/article/b1rw3lh618jvch/embracing-digital-
transformation-the-growth-of-tax-technology-in-india-and-beyond
https://blogs.worldbank.org/voices/why-digital-transformation-matters-taxation
https://blog.ipleaders.in/impact-digitalisation-taxes/

14