Generative AI (GenAI) is poised to revolutionise tax and finance operations, with 94 percent of CFOs and Finance and Tax leaders in India believing it will significantly enhance their tax functions—a sharp rise from 19 percent in 2023, a new survey by EY reveals. Globally, 87 percent of leaders echo this sentiment, underscoring GenAI's potential to revolutionise tax functions worldwide.
Also Read: Gen AI and Quantum Computing to Generate 10 Lakh Jobs by 2030: Report
GenAI's Impact on Tax and Finance Operations
The EY Tax and Finance Operations (TFO) Survey 2024, based on insights from 1,600 leaders across 32 countries and 18 industries, including 70 CFOs and tax leaders of leading Indian corporates, highlights key challenges in the tax and finance domain. Fourteen percent of Indian tax leaders are already developing strategies or running pilot projects, while 47 percent are in the exploratory phase, exceeding the global average of 40 percent.
Reflecting on the findings, Rahul Patni, Digital Tax Leader, EY India believes that "GenAI is clearly emerging as an effective tool for tax professionals to transform their workspaces and professional lives; every tax professional should learn about Gen AI, start applying it in routine tasks. Areas of application can range from AI assisted document reviews to data cleansing and drafting business deliverables for day-to-day matters. This will allow them to work more effectively, focus on strategic priorities, and make better decisions."
Also Read: AI-Driven Transformation to Add 33.9 Million Jobs to India’s Workforce by 2028: Report
Routine Task Burdens
Despite these advancements, routine tasks like data collection and tax return preparation still consume significant time for 46 percent of Indian respondents, who believe these tasks should take no more than 20-25 percent of their time. This emphasises the need to streamline operations for a greater strategic focus.
Challenges Faced by Indian Tax Leaders
According to the report, however, barriers remain, with 44 percent citing a lack of skilled talent and a limited understanding of GenAI as major challenges. Additionally, cost pressures, particularly from inflation, are leading 91 percent of Indian companies to cut tax and finance budgets, while new reporting requirements, such as BEPS 2.0's Pillar Two rules, add complexity.
Future of Tax Functions
In response, 59 percent of Indian companies are planning to change their tax and finance operating models, shifting towards more flexible and technology-integrated approaches. With a growing shortage of accountants and senior tax professionals, 72 percent of Indian respondents fear a talent crunch in the coming years, according to the report.
Also Read: India Leads in AI Adoption, Outpacing Global Average, Says BCG Report
"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 in-house or through external support," said Jitesh Bansal, National Leader, Tax and Finance Operate at EY India.
