70% of businesses have missed compliance deadlines at least once, as per a survey conducted by Clear (from the makers of Cleartax).
The survey was aimed at finding the pain points faced by tax experts. The findings are based on a survey that sampled 2,500 CAs and tax experts across the country and also past proprietary research conducted by Clear. It is a strong indicator of the pain points in filing tax returns and other compliance activities.
65% of tax experts feel they are spending more time on managing clients, data, team & processes than their core competency of ensuring correct compliance and providing better financial and compliance advisory to their clients.
72% of the tax experts said speed is the most important requirement for compliance activities. They face problems in ensuring timely compliance for the majority of their clients every month.
The study noted that almost two third of the penalties were caused majorly due to delay in receiving accurate sales and purchase data by the tax experts. In addition, correcting data is a time consuming process. Such time consuming processes for multiple clients each month in a deadline driven environment results in delays in compliance and subsequent penalties.
46% of the survey respondents said that the frequent changes in the law and lack of clarity around them has led to inaccuracy while complying resulting in penalties or litigation
These trends impact all types of businesses from small and medium to large enterprises, but impact the CAs and Tax Experts the most as they have to handle clients across all such segments and ensure accurate and timely compliance for them.
Three in four survey respondents emphasised on proactive management to avoid delays. About 86% of the respondents said that they start the month with reminding their clients for data to ensure faster and easier compliance activities.
Businesses in India have to file direct and indirect taxes. Direct taxes include corporate tax, income tax and capital gain tax and indirect taxes include GST. Tax experts also noted lack of a source of information about the change in compliance process across various kinds of taxes as a reason for the penalty. One in two respondents said that they had to go through many notifications and newspaper articles to understand the changes and assess the impact on businesses.
The respondents of the survey expressed the need for an automated compliance process. This will help businesses avoid penalties, save time and reduce manual efforts.