Inaugural Session of the Maa Vaishno Devi National Tax Conference

THEME: IMPACT OF EMERGING TECHNOLOGY ON TAXATION

It is heartening to note that the All India Federation of Tax Practitioners – North India in association with the Income Tax Bar Association, Prayagraj and the Tax Bar Association, Jammu have chosen to organise National Tax Conference at the footsteps of Sri Mata Vaishno Devi. With the blessings of the goddess, this Conference would be a great success and the discussions held in the Conference shall prove productive and contributory to creation of a robust taxation regime.

Tax and technology are the two areas which are not my forte but as a tax payer and an aware citizen I may be able to put across my understanding of and my expectations from the taxation regime. From that perspective I would share my thoughts with you. I am glad that this conference has given me an opportunity to be with in company of you all.

As we all know the theme of Conference is “Impact of Emerging Technology on Taxation”. Taxation, understandably, is not a new phenomenon. Talking about India, moving from the ancient to medieval and to the modern era, the fundamental principles of taxation have remained by and large unchanged. The primary purpose of taxation has always been to collect sufficient money for the Government to administer the governance of the state, to pursue welfare measures for the countrymen, to develop better infrastructures, communication networks and the defence mechanism. As a matter of policy, from ancient times to the modern times, the common thread running through has been that taxes should be realistic – neither be at insignificantly low rates nor be excessive for the subjects to feel pinch. The taxation regime ought to be simple, predictable and hassle free. The taxation administration needs to be fair, honest, efficient, effective and free from arbitrariness. The two principles derived from “Shastric Law” that were prevalent in the ancient and medieval times still hold good, which commanded the King to collect taxes from the subjects in the same manner a bee collects nectar from the flowers and the sun draws moisture from the earth only to return it back in thousand folds. These ‘Shastric’ edicts mandated the Ruler to tax his subjects without creating any undesirable difficulty or putting them at unease, and that the taxes collected by the Ruler to be utilised for the benefit of the subjects.

With the avowed objectives aforesaid, we have moved quite far in the system of taxation world-over. Though, the objectives have remained fundamentally unchanged, the system of tax collection has undergone a sea change. From a bureaucratic driven system we are now into a technology driven system of taxation. In the present times we have mostly automated taxation systems – be it direct taxes or indirect taxes. Tax processes are now technology driven so as to use a specific nomenclature for it – the Tax Technology.

When we talk of technology, we do not mean only of having a few computer systems installed for facilitating the human resource employed in an organisation. The technology now has moved forward in leaps and bounds. We are living in a world which is now driven primarily by a technology, in that the utmost important being internet and computer technology (ICT). The present times are the time of ICT revolution. The revolution is happening at such a fast pace that with each passing day the technological developments are hard to keep track of.

We are now in the times of Big Data Analytics, Block Chain, Robotic Process and Automation (RPA), Artificial Intelligence (AI), Machine Learning (ML) and Cloud Computing. In the times to come, the trends which would emerge are difficult to predict. But it is very important to live up to the expectations of the present day ICT revolution. Most of the facets of ICT revolution, as noted above, are already in place so far as the taxation processes and tax regime is concerned. Of late, we in India have shifted to e-invoicing, e-way bills and Business to Consumer (B2C) QR Codes which are generated on real time basis. These facilities are meant to ensure the transparency, certainty and efficiency in the collection of taxes – be it GST or other equivalents. The Tax Operation Managers, the Business Conglomerates, Bulk Sellers, Retailers and the Consumers are meant to be equally facilitated by the tax technology. The intelligent automation is meant to ease out the burden of over-complicated tax processes, which are hard to be understood by the traders and the consumers in equal proportion. When we have to deal with the tax processes, it is not only the big corporate houses but we also have to take into consideration a petty retailer located in a narrow lane of a far flung village in the remotest corner of the country. The technology should benefit all of them.

For the tax technology to be effectively implemented and to be efficient in tax collection and to be a great facilitator for the tax payers, there has to be an effective network of technology working over the length and breadth of the country, for which we need an effective internet technology. Although, we have fast created the network spaces – be it the optic fibre networks or the fast mobile network, still there is great network divide between cosmopolitan cities and the remote villages. For creation of country wide and reliable tax technology network we cannot imagine the absence of fast and robust internet.

For the tax technology to work effectively and efficiently, we shall need to open up the horizons of opportunities. We need to create Enterprises Resource Planning (ERP) which is open ended for the tax technology development companies or organisations to develop technology for the end users, which can multiply the benefits of the technology for the tax collectors and tax payers. These enterprise solutions have to work on collaborative and coordinated basis. For the Government and tax collection Departments only to create and put in place technology would be to expect too much. For any technology to be successful there has to be collaborative involvement of the propounders of the technology and its users at all levels. In this regard, the involvement of ICT innovators and IT – Multi National Companies have greatly helped in creating the efficient and effective technologies. Involvement of IT – MNCs in the process of filing of income tax returns, though, has seen few technological glitches, is expected to greatly enhance the experience of a tax payers and the tax facilitators in the process of submitting their income tax returns and to have seamless and hassle-free consequences related therewith.

In the developed countries and few developing countries, the experience has been gained over a period of time that tax technology has greatly helped the Governments and its functionaries in broadening tax base and the consequent tax collections. The broadening of tax base has also helped the Governments in simplifying and lowering the tax rates thereby to help the tax payers enormously. In India, we are fast catching up with the developed countries in implementation of tax technologies in all forms of taxation. In some ways, understandably, India is becoming a global leader, given the fact that most of the IT Companies who are world leaders are willing to cooperate with the Government and its agencies in effective implementation of tax technologies.

Apart from implementing the policy of efficient tax technology and suitable network for its effective working, few more steps are imperative to be taken as supplemental exercise. It is very important to educate the tax payer for a smooth transition while there are technological advances in the taxation regime. Small and medium business enterprises and individual tax payers need to be updated in their knowledge of tax processes. A cyber-friendly atmosphere needs to be created by the government in collaboration with and in consultation with all the stakeholders. Collection of taxes needs to be simplified. Frequency of payment of taxes and filing of tax returns needs to be reduced. Instead of monthly basis it can be better on quarterly, half-yearly or annual basis thereby allowing more time to businessmen to focus on their business activities. Over-dependence of the small and medium enterprises and individual tax payers on the tax consultants or tax managers also needs to managed by putting in place simplified taxation processes.

Over a period of two days, the discussions in this conference shall focus on many areas related to use of existing technology and the emerging new tax technologies, which sessions shall be guided by the eminent experts, reputed educators and renowned tax professionals. These brainstorming sessions would yield very positive results and the take-away from these discussions are sure to be utilised by the Government, Managers of Tax, Tax Planners, Tax Consultants, Tax Compliance Officers and the Tax Payers equally.

Again, I wish a great success to the conference and thank the organisers of this Conference for organising it and for providing me an opportunity to share my thoughts with you.

(Source : Speech delivered at Inaugural Session of National Tax Conference held at Katra on 2nd October, 2021)

 

“When I despair, I remember that all through history the way of truth and love have always won. There have been tyrants and murderers, and for a time, they can seem invincible, but in the end, they always fall. Think of it–always.”

“Power is of two kinds. One is obtained by the fear of punishment and the other by acts of love. Power based on love is a thousand times more effective and permanent then the one derived from fear of punishment.”

– Mahatma Gandhi