As the tax administration within India is enhancing its digital footprint, corporates are also looking to digitalise their tax functions. With the advent of technology, the Indian tax administration can now focus on reviewing transactional tax compliance right down to the transaction level using technologies such as data analytics. Given this, companies need to ensure that voluminous data sets used in tax compliance are processed not only accurately but also in a time efficient manner. That’s where technologies such as ‘Robotics Process Automation’ (RPA) come into play.
What is Robotics Process Automation?
RPA is a software robot (Bot) which can undertake pre-defined repetitive tasks on large volumes of data with minimal human intervention.
Some illustrative areas of automation in direct and indirect tax compliance can be as follows:
Creating a digital register of data from thousands of hotel and airline invoices for GST input tax credit (ITC) purposes. The Bot can be programmed to
- Collate emails from travel agents
- Opening and reading airline and hotel invoices
- Capture data from invoices and create a digital register containing data required to claim GST ITC
Automated verification of thousands of PANs on TRACES portal before preparing TDS return forms. The Bot can be triggered after logging onto TRACES portal and then it can automatically:
- Navigate to “Pan Verification” menu and key in tens of thousands of PANs along with Form Types (26Q/27Q) one at a time
- Prepare a register of PAN IDs, PAN status and PAN holder’s Name.
Simplify dividend distribution process for a listed company. In this process, the Bot can:
- Download Forms 15CAs generated after bulk upload of forms
- Subsequently capture data from Form 15CAs for creating a register of thousands of line items to be submitted to the banker for making the foreign payments.
Bots along with OCR and Machine Learning technologies can be used to:
- Create digital registers for Bill of Entries, Shipping Bills and Vendor Invoices
- Verifying e-Invoices by scanning QR codes and subsequently verifying digital signature of the NIC IRP (Invoice Registration Portal)
So, what are the key benefits that we will derive from the above illustrative use cases ?
- Manual errors on voluminous data would be eliminated – minimizing penalty risks
- Since Bots can run independently and overnight, tax processes will become time efficient
- Multiple tax processes can be programmed and run on the same Bot (at different times)
Now comes the implementation stage
There are various ways in which a company can implement automation using a Bot.
- Option 1 – Acquire a third-party RPA technology license, engage a tax technology expert team to build as per specific requirement and operate the bot internally within the organisation
- Option 2 – Engage a tax technology professional services firm who can process the data on their RPA platforms and provide you with ready outputs as per agreed timelines.
The inherent advantages of Option 2 are:
- Processes can be automated almost immediately since “ready-to-use” automation already exists on their internal platform.
- There is no need to acquire RPA technology annual license.
- No need to have an RPA expert within the company to change the program every time tax rules change, which could be often.
While the perceived advantage of Option 1 is that the underlying data does not leave the organization, it has to be viewed holistically if the data is already being shared with professional services firms for compliances such as GST, TDS, Statutory Audit, etc.
In summary, automation using RPA can play a huge role in making your tax function efficient with high accuracy and its adoption is becoming a must for tax functions.
The article has been written by Rahul Kashikar, Partner and Head, Tax Technology and Transformation, KPMG in India and Sandesh Mahagaokar, Partner, Tax Technology and Transformation, KPMG in India