New Delhi [India], November 27 : Cost pressures have emerged as the top concern for Indian companies, as 91 per cent companies are planning to reduce their tax and finance budgets, reflecting the impact of financial strain on corporate operations, said a EY report.
The survey by the professional services firm highlights that cost pressures are the top concern of the companies for the first time, with inflation and cost-cutting eroding tax and finance budgets.
At the same time, the survey highlights that tax functions face an increasing urgency to manage more complex and data-heavy tax responsibilities. New reporting requirements like BEPS 2.0's Pillar Two rules, are expected to have a significant bearing on the burden of tax and finance functions, it added.
As per the report, the organisations are looking at alternate operating models, signalling a strategic shift in ways of running the tax and finance operations. Notably, 59 per cent of Indian companies are planning to change their tax and finance operating models, the report added.
In the context of shift in ways of working, the survey highlights a trend of tax skills being complemented very well by data and technology skills. However, there is extreme talent pressure witnessed at the same time.
About 72 per cent respondents from India believe that fewer accountants entering the profession and retirement of senior tax and accounting professionals would be a significant disadvantage for the tax and finance function over the next five years, the report highlighted.
"As regulatory and reporting burdens grow, tax and finance functions face increasing strain. Tax teams in companies will need to step out of their comfort zones and start addressing newer problems around tax function strategy, processes, data quality, audit readiness and so on. The need of the hour is for tax and finance functions to have access to expert tax knowledge, combined with a working knowledge of process, data and technology, whether inhouse or through external support," said Jitesh Bansal, National Leader, Tax and Finance Operate, EY India.
Going further, the EY tax and finance operations (TFO) Survey 2024 highlights that 94 per cent of CFOs and finance and tax leaders in India believe generative AI (GenAI) will significantly enhance the effectiveness of their tax functionsa remarkable increase from just 19 per cent in 2023, highlighting a growing recognition of GenAI's potential in the tax landscape.
It further highlights that Indian tax leaders have already begun to make strides in their GenAI journey, with 14 per cent actively developing strategies, launching pilot projects, and exploring early-stage Gen AI applications.
Another 47 per cent are in the exploratory phase, investigating and experimenting with GenAI's potential to enhance their operations, surpassing the global average of 40 per cent, as per the report.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor