What's Your Indirect Tax Optimisation Strategy for 2021?

The past year has proven incredibly challenging for corporate organisations operating in India. In the wake of the COVID-19 pandemic, businesses have had to battle through supply chain disruption, ongoing regulatory change, a rapid move to remote work and unprecedented cash flow pressures.

Despite these challenges, however, GST revenue collection reached record highs in India, almost hitting the ₹1.20 lakh crore mark; and the total number of GSTR-3B Returns filed for the month of December up to 31 January amounted to 90 lakhs. This could potentially indicate that corporate earnings are on a slow path to recovery, and that indirect tax compliance standards are improving.

Other factors contributing to the steady increase in tax revenue in recent months, according to the Ministry of Finance, are “closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, Income-tax and Customs IT systems, and effective tax administration.”

Clearly, India’s authorities are focused on tightening indirect tax scrutiny. The government also has some potential GST reforms in the pipeline. In her 2021 Budget announcements, Union Finance Minister Nirmala Sitharaman advised that every possible step would be taken to streamline GST this year. Proposals include revising the customs duty structure and reviewing over 400 outdated exemptions through extensive consultations.  

While a smoother GST structure will be welcomed by many businesses, organisations will have to manage yet more change in the indirect tax ecosystem. This involves making sure that people, processes and systems are fully capable of meeting ever-evolving indirect tax compliance obligations. 

Given the renewed focus on GST and the uncertainty that lies ahead, there has never been a better time to evaluate your indirect tax strategy and make any necessary adjustments to ensure compliance with the constantly changing requirements.

It's time for a health check

The first step in any indirect tax optimisation strategy is to identify the issues that may impact the efficiency of your indirect tax processes, the productivity of your teams, the accuracy or your returns and the quality of your data.

Here are some key questions to ask your team:

  • Are we spending too much time doing manually oriented tasks to support tax compliance processes?
  • Are we struggling to track down the data we need to prepare our GST filings?
  • Are we reporting all the transactions happening in the business?
  • Are we spending too much time checking, adjusting and/or reconciling data for our GST returns?
  • Do we have limited visibility over the activities and transactions being carried out across the enterprise?
  • Do we have sufficient time for higher-value tasks such as strategic planning and analysis?

If one or more of these issues is holding your indirect tax team back, you may want to consider introducing indirect tax technology that optimises and automates essential determination and compliance tasks. With the right solution in place, you can gain greater confidence in the accuracy of your tax related data, close any compliance gaps that may exist, and ready your indirect tax operations to meet whatever challenges 2021 may bring.

Here are six ways that indirect tax technology can optimise your approach:

1. Accuracy, every time:
The right solution can integrate with your ERP platforms and other financial systems to determine GST on all transactions, using the latest rates and rules

2. Keep pace with change:
With a system that gives you instant access to comprehensive, expertly researched information on GST regulations, you’ll never run the risk of using out-of-date tax rules.

3. Understand upcoming legislation:
Often legislation is updated and implemented quickly, giving you little to no time to adapt your systems, train your people or inform your clients. With a solution that tracks changes in legislation for you, in real-time, you can be sure that you are always working with the latest information and filing accurate, fully compliant GST returns.

4. Don’t rip and replace:
With an indirect tax automation solution that offers real-time integration with your existing IT set-up, there will be no need to undergo a lengthy and disruptive tax technology change project. Rather, introduce a solution that stretches the capabilities of your existing software investments, such as your ERP platforms, and scales quickly to meet your needs.

5. Step up data visibility:
One way to ensure you are ready to defend your data and decisions to auditors and authorities, is to be able to prove your entire flow of data from the moment it enters your ERP system all the way to where it is filed in any government portal.

6. Simplify e-invoicing:
With the progressive introduction of e-invoicing in India, it’s essential to have GST technology that allows you to easily connect your e-invoicing process to the Invoice Registration Portal (IRP).

Thomson Reuters ONESOURCE can be the comprehensive indirect tax solution that your business is looking for to meet the above goals. Harnessing the power of automation, intelligent data reconciliation, adjustment and reporting capabilities, this globally trusted technology allows your organisation to reduce the effort and risk associated with GST determination and compliance.

To drive further optimisation and improvement, you will also have access to versatile dashboards that provide your tax leaders with an analytical view of all sales/purchase data. This enables you to proactively address problem areas and identify opportunities to enhance compliance further, while preparing your enterprise for a future where near real-time reporting is the norm.

Are you ready to build an indirect tax function that adds greater value to your bottom line?

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