Cloud solutions for tax compliance gaining popularity

​​The current lockdown has prompted even fence-sitters to begin using these tools, as they face constraints in accessing critical information that resides on systems in company premises and requires presence of executives at the location.

Agencies
NEW DELHI: Adoption of cloud-based tax compliance solutions has risen among companies, including small and medium enterprises, as many consider going digital as a permanent alternative to on-premise systems as it offers more flexibility and risk mitigation.

The current lockdown has prompted even fence-sitters to begin using these tools, as they face constraints in accessing critical information that resides on systems in company premises and requires physical presence of executives to access, providers of cloud-based services said.

The shift, industry insiders said, was taking place even as the government had extended compliance deadlines for both direct and indirect taxes by three months to June 30.


“Instead of using some compliance solution which is hosted on the premises of the enterprise on a physical server, companies want to shift to cloud services,” said Archit Gupta, the chief executive of Cleartax, one of the several companies offering cloud services.

The number of companies signing up for cloud services has risen dramatically in March compared with February owing to annual closure procedures, he said. One of the sharpest increases, 31% <<this for Cleartax?>>, came from Maharashtra, which has reported the highest number of Covid-19 cases and was among the first states to go into a lockdown.

Companies are opting for the solutions — referred to as software as a service or SaaS — as they provide scale and elasticity to handle large invoices and real-time reports, while providing high security with low maintenance. “It is for these reasons that implementing cloud-based tax technologies is expected to continue in the future, as it rationalises business risk,” said Rajat Mohan, a senior partner at AMRG Associates.
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SaaS is also cost effective, as the solution systems serve a large number of customers at any given time, making it more amenable to even small companies.

“SaaS-based solution providers are updated with the new tax system, compatible with frequent changes, cost-effective, efficient by reducing repetitive and manual tasks and reduced risk of error and omissions,” said Kapil Rana, the founder of HostBooks that specialises in goods and services tax-related cloud compliance.

Online compliance solutions also help companies keep pace with technical and procedural changes of tax compliance amid reforms being undertaken by the government, such as e-invoicing, new online returns, faceless assessment and going forward, faceless appeals, industry watchers added.

“Most of the larger companies are already using cloud for elements of compliance, especially in indirect taxes, where most of the compliance is done online,” said Rohinton Sidhwa, a partner at Deloitte Haskins and Sells, adding that compliance of direct taxes via cloud would pose challenges.
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