Following the rollout of Goods and Services Tax (GST) on July 1, businesses are gradually adjusting their accounting systems for the new tax structure. The government has undertaken initiatives to give small companies a breather and make transition seamless. ClearTax, an online tax-filing start-up, is also riding the GST wave and has introduced services to simplify tax-filing under the new GST regime. Understanding the GST rules and their implementation is the biggest gap, says Archit Gupta, CEO, ClearTax. “It will take 12-18 months for a country like India to settle down because it is a far more complex country with multiple states, languages, and limited internet access. We want to make the software visual so that it reaches Bharat and not just corporate India,” he says.
The ClearTax GST software is a ready-to-use cloud-based software that enables timely reconciliation and GST return preparation. ClearTax’s one-click solution can be integrated with existing ERPs and allows businesses to file their returns via both online and offline utilities. The product is designed with an easy-to-use interface and has customised user dashboards. To make the transition easy, ClearTax has, built video based self-learning modules via tie-ups with e-learing platforms.
Amazon India has tied up with ClearTax and conducted workshops to ensure GST compliance for all sellers registered on the platform. ClearTax will also introduce a mechanism that will allow merchants to claim input tax credit. The online tax filing start-up is also helping online entertainment ticketing player BookMyShow’s partners, including cinemas and event organisers, with convenient registration services, simplified filing and reconciling tax returns and assisting them to become GST compliant through its dedicated managed services.
“We are working systematically with some e-commerce players to help them augment their technology so that sellers can work with ClearTax. GST compliance is important for sellers as it going to affect cash flows and hit pricing that will hamper competitiveness in e-commerce,” says Gupta. Meanwhile, with the deadline for filing income-tax returns by individual taxpayers less than a month away (July 31), ClearTax is prepared for the last-minute rush. “We have 10-20 servers running during routine time when there is no rush in filing but as the deadline approaches we have to run up to 400-500 servers during the last three weeks or on days closer to July 31,” Gupta shared.
ClearTax works on a technology that breaks down the Form 16 issued to salaried taxpayers into visual blocks and reads the data segment by segment. Once the data is in place, the software computes data and tallies it with the calculation done by the employer in the Form 16. The company works in partnership with the government to align the formats and incorporate the same into its systems. ClearTax uses the client’s Form 16 to extract the necessary information for filing tax return. “The user only has to upload the PDF file and the software will read it and fill the forms. It is thinking on our behalf and reducing the effort by using technology and software,” says Gupta.
As a part of its clientele, ClearTax has a base of over 10,000 CA firms who use the ClearTax software to prepare tax returns for their clients. “We are providing this software to businesses, CA firms, small and medium businesses, large retailers and FMCG firms,” Gupta added. Currently with about 1 million tax returns filed annually, ClearTax is expecting 100% growth to 2 million tax returns on back of GST. ClearTax either charges a monthly or an annual subscription for its software technology and the average fee ranges from Rs 5,000 to Rs 15-30 lakh, depending on the complexity of the plan.
“We are expecting a 30% month-on-month growth in the revenues in the next 8-9 months and will be profitable by mid 2019,” Gupta added. ClearTax also offers assisted filing plans for individual customers. This allows the company to monetise from its existing users and it is hoping to approach 50,000-60,000 customers under this service by the end of 2017. ClearTax started its operations by launching a product for income tax-filing. Gradually it expanded its bouquet of services and started looking at tax planning and benefits for its clients.