Come July 1, India’s current tax system will be overhauled with the implementation of Goods and Service Tax (GST). There is no doubt that the current tax system in India is quite complicated given that there are multiple taxes that need to be filed with multiple tax authorities.
The GST will replace central and state-level indirect taxes like VAT, service tax, excise, etc. And it is said to simplify the current tax system with a single, straightforward tax.
But change is never easy. And transitioning to the GST regime will mean companies changing how they do business and that is no easy task. Paperwork, a whole new system and process of filing taxes, new steps for tax preparation–there’s a lot that needs to be done.
For example, there are 11 types of GST returns that must be filed by all kinds of taxpayers and at different times. Businesses registered under GST must file returns thrice a month! They need to upload details of their purchases and also products sold.
Every invoice filed with GST must have the name, address and GST Identification Number (GSTIN) of the seller as well as the customer, and even the place of supply. Failure in complying with any of the rules might cause businesses to face penalties.
While CAs might be becoming everyone’s best friend right now, a number of companies, especially startups are grabbing the opportunity GST is providing to come up with services and open up new revenue streams.
For starters, The GST Network (GSTN) is appointing GST Suvidha Providers (GSP) who will be third party players helping taxpayers with convenient methods of interacting with the GST system from registration of entity, to uploading of invoice details, to filing of returns.
Nearly 34 GSPs have been appointed in the first phase. While a company needs to have a minimum annual turnover of at least Rs 5 crore to be a GSP, these Suvidha providers can deploy third party players startups to build a platform for them.
One such startup is Automaxis that works on developing enterprise automation platforms to help SMEs and startups in the B2B and B2C space eradicate the manual process of tax filing and invoicing, using technology like business intelligence and machine learning.
Founded by Pratik Sharma, who runs a B2B e-commerce portal for industrial supplies, he is now looking to cash in on the hottest topic right now–GST.
Having launched a service that works on automation of tax filing and invoicing, GST is now their new area of focus.
Automaxis acts as an application service provider (ASP) for GST Suvidha Providers (GSP). It has built a platform that automates GST filing. On the three filing dates every month (10th, 15th and 20th), their application pops up to the end user. All the end user needs to do is log in, get an OTP from the GST Network and all their forms get filled up automatically.
This makes the job of any company extremely simple in terms of filing returns thrice a month.
It has also launched a standalone app for CAs and tax practitioners to manage their clients.
Automaxis is currently being incubated at T-Hub.
The team of Automaxis
While there are startups like Automaxis that are looking to be ASPs for GSPs, a number of companies that have developed GST-related software have also applied to be a GSP.
This would help companies connect its software directly to the GST Network.
One such company is the relatively older taxation startup ClearTax, which is also betting big on GST. In fact, according to Archit Gupta, Founder and CEO of ClearTax.com, GST has created half a billion dollar software opportunity for companies in India.
ClearTax released a ready-to-use GST solution that offers services like reconciliation with vendors, tax validation engine, input service distribution, TCS for e-commerce, preparation of all GSTRs, vendor analytics and more.
The company says that the software is also capable of intelligent reporting which helps prevent mismatches and allows communication with vendors from within the software. The software can handle all types of registrants, including support for ISDs (Input Service Distributors) and reverse charge scenarios.
As part of the software’s pilot phase, ClearTax has collaborated with over 20,000 CAs and practitioners from over 100 cities in India.
ClearTax also offers online GST-training courses for CAs, lawyers and tax professionals through videos, case studies, webinars and quizzes prepared by industry experts.
“We started working on GST a year ago and have invested of $5 billion on the initiative. Since then we have scaled up to 1000s of SMEs, enterprises and CA experts who the GST software for compliance. We have created a differentiated technology, which can create millions of invoices going through our software at once. And our main focus is on simplicity and ease of using the software,” says Archit.
Another company that built a GST platform and is hoping to be a GSP is Zoho. Unlike a number of Indian companies, what works for Zoho is its previous experience in working on GST compliance with countries like Australia and Canada.
Something different that Zoho is doing is rolling out a standalone GST app for companies.
“While we have integrated GST in all our apps, we are also providing a standalone GST application. Many companies may not want to switch their accounting software, so this app is for them, so they can import their transactions on this app and file return from it. This tool will be unveiled once GST is rolled out,” says Sivaramakrishnan Iswaran, Director, Product Management and Business Development, Zoho.
Zoho’s larger GST software has been developed under Zoho Finance Plus. Their offering covers a much larger base for companies from invoicing to order management to accounting, and even a company’s back office operations.
“Zoho completely takes care of all requirements right from recording GSIN of a vendor to recording transactions and making appropriate changes invoices and to filing returns. There are many offering similar services, but Zoho is a complete end-to-end suite,” Sivaramakrishnan says.
On applying for a GSP licence, Sivaramakrishnan says that being a global company with over 10 years of experience in cloud, they feel they can be a differentiator and leverage their experience to provide a better experience to end customers.
While these are just a few players looking to cash in on the GST, they are up against even IT major like TCS.
But for a market so large, the more players they are, the better, experts say.
“Most people are currently clueless about what GST entails. So for a lot of startups in the compliance and taxation space, this would be a time to create an opportunity by making themselves visible. They can say hey, you need support with GST? We can offer it to you. So this is the time for them to easily capture the market and make themselves visible,” says Shyam Sekar of Startup Xperts.
While larges companies may have their own legal and taxation teams to handle the transition, the opportunity really lies with medium-sized and small businesses.
In that scenario, what would probably be the most important USP for any GST software provider would be to offer great value at an affordable price.
This article has been produced with inputs from T-Hub as a part of a partner program.