One of the major concerns raised by companies offering GST mobile apps and software services is that they could lose market share to the new offline application tool being built by Goods and Services Tax Network (GSTN).
GSTN is the nodal agency that lays down the IT infrastructure for the newly proposed tax regime. The tool being built by GSTN will help taxpayers, particularly those with restricted internet connectivity, upload their invoices and file tax returns. The tool targets small and medium taxpayers, assisting them in converting their invoice data into the format that matches with the GST system.
The proposed tool will be a big relief to small businesses and other similar entities that require a free and simple solution in order to comply with Goods and Services Tax. However, the GSTN news has caused dissatisfaction regarding market share among companies that offer services under the GST Suvidha Providers (GSPs) and Application Service Providers (ASPs) labels.
The GSTN has allowed 34 companies to serve as GSPs that would have direct access to its IT infrastructure. EY, Alankit, and Tally Solutions are part of these shortlisted companies. GSTN has also authorised ASPs to offer tax return-filing tools and services, in association with the GSPs.
Himanshu Jain, founder of LegalRaasta, an ASP that enables tax return-filing in association with GSPs, said, “The offline tool can eat into almost 20-30% of the market share we had projected while building our GST tools”. LegalRaasta has invested Rs.10-15 crore in the initiative.
A similar tone has also been adopted by ClearTax, a tax-filing online service that has invested $3.3 million in building its products. Founder of the company, Archit Gupta mentioned that the GSTN tool would be a credible threat in the MSME segment. He also stated that the market would, however, adopt the most innovative product from the pool. Gupta further mentioned that ClearTax would be levying a charge of Rs.100 per month for usage of its GST platform.
Tax partner of EY India, Bipin Sapra mentioned that they are catering to the larger and mid-sized enterprises, while the GSTN tool assists small taxpayers. Hence, they do not see a competition in the market.
The Managing Director of Alankit, a point-of-sale hardware device that helps businesses in tax compliance, also stated that they do not foresee a conflict with the introduction of the GSTN tool. He mentioned that Alankit expects 70% of its revenue from small and informal businesses. He was confident that the value-added services provided by Alankit would prevent the GSTN tool from eating into its market share.
CEO at GSTN, Prakash Kumar said that the agency is providing the mandated free service for GST compliance. Their offering would minimise costs for taxpayers. He also stated that the customised and specialised solutions offered by GSPs are still required for the specific needs of users.