Build trust in GenAI to transform India’s data-rich tax landscape: report

The report has highlighted the impact of GenAI on taxation and states that managing tax law will become easier with the technology. It says GenAI can help organizations keep up with the latest tax laws and regulations and bridge the current time gap between regulatory requirements and an organization’s willingness to provide large amounts of data.

Furthermore, the report added that Gen AI can help companies with tax research with improved Large Language Models (LLMs). It can also serve as a smart assistant for the taxpayers by turning into a more personalized tax assistant, simplifying the complex data requirements and ensuring that the data is valid.

Growing interest in GenAI

The report shows that 57 percent of Indian CEOs surveyed agree that GenAI has changed the way their companies create, deliver and capture value. 71 percent of CEOs expect GenAI to increase the efficiency of their employees this year, while 70 percent think it will improve their own performance, the report said.

Research firms have said that the Indian Gen AI market is expected to grow at a CAGR of 48 percent to $17 billion by 2030 from $1.1 billion by 2023. About 84 percent of Indian CEOs are allocating capital to Gen AI finance projects to gain an edge over their rivals.

Impact of GenAI on the economy

Analysts have also said that the cumulative impact of GenAI on India’s GDP could range from $1.2 trillion to $1.5 trillion by 2030, which would add an additional 0.9 to 1.1 percent to the annual CAGR. The number of generative AI startups in the country has more than doubled, from 25 in 2021 to 60 in May 2023, raising $590 million in funding as of May 2023.

In light of the GenAI boom, companies are also facing challenges around regulation, building trust among users and, most importantly, the ability to handle sensitive data. Governments around the world are driving major digital changes, such as anonymous assessments, digital compliance and e-invoicing, to enable a coherent view of a taxpayer’s profile and holistic tax assessment.

Tax concerns about GenAI

However, as with any new technology, there are concerns and fears about GenAI’s behavior, limitations, and privacy. Many experts have warned that the technology is still underdeveloped and is, for now, more suitable for non-tax, administrative work.

Several tax professionals have flagged data privacy concerns that LLMs may not give a company access to how its data and intellectual property is used. Additionally, the report stated that since tax is a subjective matter, it becomes important to fully understand GenAI’s biases when feeding LLMs with data.

And LLMs have been known to sometimes provide inaccurate information. The reliability of the technology cannot therefore be guaranteed.

What is the future roadmap for GenAI?

Providing a roadmap for GenAI’s future in tax support, the PwC report prescribed a number of methods to address current challenges. It was stated that organizations need to develop a well-defined GenAI strategy, clearly defining the roles and responsibilities of implementing this technology. It further said that companies must adhere strictly to regulatory compliance and anticipate future compliance to stay ahead.

First print: March 28, 2024 | 6:03 PM IST