Tax compliance software

A direct tax is one paid directly to the government by the persons (juristic or natural) on whom it is imposed (often accompanied by a tax return filed by the taxpayer). Examples include income tax, corporate tax, and transfer tax such as estate tax and gift tax. Basic software for income tax in the form of a tax calculator, and are now widely used. For example, the Government of India provides an income tax calculator^[1] on their website. Corporate tax compliance software has also been in existence for years, more often than not within the company's Finance & Accounting software or financial module of ERPs. These suites have the facilities to maintain the company's General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed Assets along with some basic taxes.^[2]

An indirect tax (such as sales tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. Indirect Tax compliance has always been much more complex as compared to the direct taxes. Many indirect tax compliance programs have separate modules for VAT, Service Tax, Customs etc.

Value Added Tax (VAT) legislation has a common structure across countries (and states in case of India). Software must be customized to each country, however, because of differences in the some areas, such as handling of credit of capital goods, sale of scrap and second-hand goods, formats of mandatory submissions and audit exercises.

Service tax compliance software often include maintenance of credit registers, handling reverse charges, rebate claims on export of services along with payment of tax and filing of returns.

• Streamlined Sales Tax Project