Dont be taken in by Indian enterprises swanky ERP and other financial solutions. Tax-related data is still confined to manual processing, which is obviously a cumbersome and time-consuming process.
While broader solutions like Tally have been in the market for long, niche tax compliance solutions like KORE from BMR Managed Services and OptiSuite from Collabera are now entering the marketplace. While OptiSuite from Collabera covers almost the entire range of statutory compliance required to be met by Indian enterprises, KORE manages transaction tax compliance needs including service tax, value-added tax and excise. Currently catering to service tax, it will add value-added tax (VAT) module in the second quarter of this fiscal year. The combined platform shall be a precursor to the GST regime that is expected to be introduced in India post 2010. The solution is presently being leveraged by several leading enterprises like Network 18, Indian Value Fund and Transocean, says Nitin Atroley, partner, BMR Managed Services.
There is a large market in India for these kinds of solutions. It is very important for enterprises to have such solutions to reduce errors, improve manpower productivity, create accuracy, help in the process of audits etc. At IDC, we see a substantial scope for this market in the years ahead, says IDC analyst (software and services research) Nandavarpu Kiran Kiran.
Several enterprises that were running Tally have been using it but not to the full extent, says Kiran. Already, Tally Solutions have versions of their solution for traders that are VAT-regime compliant, including modules for service tax, TDS and excise duty. These solutions have done well in the SMB segment.
We have gone a step ahead and our offerings are not only VAT-regime compliant, we have modules for service tax, TDS and excise duty. In addition, we have solutions that meet state-specific or region-specific tax compliance requirements, says Shiv M Kumar, deputy general manager, Tally (India).
Globally too, niche tax solutions have found acceptance in most of the developed markets like the US and Europe. As global business continues to increase in complexity and governments gain sophistication in their tax collection practices, enterprises are challenged with complex global tax transactions that cross multiple jurisdictions, constantly changing rates and rules, and increasing exposure to penalties. Specialised tax management solutions with centralised tax management system that can support multiple countries and jurisdictions have been extremely successful.
However, given the uniqueness and the complexity of the Indian tax laws and regulations, none of these solutions met the specific compliance requirements for the country. In depth knowledge, comprehension and understanding of the tax laws is extremely essential to develop, customise and maintain tax compliance solutions and this is where the key challenge lies.
Financial management and accounting in most large and mid-size enterprises in India today is managed though the specific modules of ERP systems. Typically, these systems are also leveraged by the enterprises to help the tax team compute the tax liabilities and extract relevant information. Since these applications are primarily financial and accounting solutions, they are not intrinsically capable and aligned when it pertains to the Indian tax compliance requirements. In many cases, the relevant information may reside in other standalone systems viz CRMs and supply chain applications.