When tax meets technology

Tax is one area where the govt has moved far ahead in adopting technology and digitisation. Professionals must catch up with the digital architecture in place

- DINESH KANABAR ABHISHEK MUNDADA

BEFORE ALGORITHMS TOOK over and artificial intelligence (AI) began to decode tax, tax professionals mastered their craft through files, forms, and notes. There was a time when tax meant towers of files, often dusty, ink-blotted notes in margins, paper challans obtained after standing in long queues at banks, and an indexed paper book. Those who lived them still remember the rustle of paper, the smell of ink, and the possession of physical order with a sense of nostalgia.

Tax as a profession generally rests on three aspects: (i) compliance/reporting—routine but critical; (ii) technical expertise and judgement impacting interpretation, risk assessment, and decision-making; and (iii) tax assessment and litigation—everything around preparation and presentation has changed.

The pace of digital transformation, amplified by the effects of AI/machine learning (ML), has rewritten how tax is administered and more importantly how professionals prepare to deliver solutions. Staying relevant today means keeping pace with not just the law, but also the manner in which the tax is being implemented both at the level of the income tax department and taxpayers.

India has moved rapidly towards a tech-driven tax system. Its digital tax journey began over two decades ago with electronic filing of tax returns. What began as a modest approach to digitisation has evolved into a fully integrated data ecosystem—in the nature of income data reporting in the annual information statement, cash deposits in bank accounts and reporting other financial transactions, faceless assessments, etc.