GST rolls out big tech business

GST rolls out big tech business for Indian startups

Startups providing technology and software for the implementation of and training on GST, and for uploading and reconciling taxes are sensing a great opportunity in the GST Suvidha Provider (GSP) scheme.

GSPs are government-mandated platforms that can build their own GST return filing software on the GST Network (GSTN).

GSTN shortlisted 34 companies to be GSPs in the first phase. The criterion then was the firms must have been in existence for at least three years and must have at least a Rs 10-crore average annual turnover. For the second phase of GSP selection, GSTN has lowered the turnover required to Rs 5 crore.

Among those that have applied in this phase are startups like Clear Tax, LegalRaasta, GST Star, and Moglix.

Unlike an income tax return filing, or TDS payment, GST returns are to be filed thrice a month by all kinds of businesses, thus increasing the potential customer transactions for the platforms providing GST-compliant software.

Larger enterprises have their own ERP (enterprise resource planning) solutions from the likes of SAP and Oracle.

But those tend to be expensive for small and medium enterprises (SMEs). Startups will find ready clientele in this segment.

GST software along with training, uploading, reconciling and other services will be a $2-billion market this year, of which the majority of the opportunity will be for startups working in this space,” said V Balakrishnan, co-founder of Exfinity Venture, an early stage funder, and former CFO of Infosys.

Balakrishnan, who has invested in GSTStar, a Bengaluru-based GST solutions company founded by Infosys veterans Shailesh Agarwal and Balaji GS Rao, said startups providing cost-efficient solutions and who can do it for thousands of customers can become very successful.

“In the first year, SMEs will even need some handholding as they will be filing invoices for the first time ever,” he said.

Online income tax filing platform Cleartax has been working on a GST-compliant platform for a year now.It has tied up with e-commerce platforms like Amazon and Voonik, as also traditional companies across various sector

Archit Gupta, founder of Cleartax, which has 400 employees now, said the company has invested around $5 million on building the GST platform.

“Our team has expanded twice since. We have seen a sharp increase in the demand for our software. Right now, we have 2.5 lakh businesses on our platform and aim to reach 10 lakh businesses in the next 12 months,” he said. LegalRaasta, which started as an online legal services platform, has now built a GST solution for SMEs and chartered accountants.

Last month, the company raised $5 million from venture funds, mainly on the strength of the GST platform.

“Our current GST software is a 360-degree turn from what it was before because the rules weren’t clear at all when we started,” said Himanshu Jain founder, LegalRaasta.

The company has over 80,000 SMEs on its platform, and expects to touch 5 lakh SMEs by end of this fiscal year.

Moglix is a business-tobusiness e-commerce firm, but when founder Rahul Garg saw that the thousands of buyers and sellers on its platform needed help to be compliant with GST, he decided to work on an in-house solution for manufacturing units.

“We were exposed to the complexities of the Indian taxation system and we understood the supply chain,” said Garg, whose venture is backed by Ratan Tata.

All startups deliver their solutions over the cloud, which means users need to just take a subscription and not buy the software.

It also avoids the complexity of keeping IT staff to manage the software and hardware.ClearTax and LegalRaasta currently function as application solution providers (ASP) that work with GSPs to provide their software.

A GSP license would help them provide their own infrastructure to the SMEs.

Balakrishnan estimates that there are a hundred startups working in the space. He said that from the second year onward, the data and open API (application programming interfaces) of GSTN will help startups to provide a plethora of financial services based on the tax payer profile.

We look forward for your valuable comment www.carajput.com

FOR FURTHER QUERIES CONTACT US:

W: www.carajput.com   E: singh@carajput.com T: 9-555-555-480