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GSTN may steal thunder from GST-app makers

As several companies are budgeting crores of rupees to rollout software services and mobile apps to help 8-million tax-paying entities file returns for the Goods and Services Tax (GST), one major concern for several of them is losing market share to a new offline tool to be launched by the Goods and Services Tax Network (GSTN). The GSTN is the nodal agency in charge of laying down the IT infrastructure for the new tax system.

The GSTN is currently building an offline application tool to help taxpayers, especially those with limited internet connectivity , upload their invoices and file their returns. The tool will be developed in a way to enable small and medium tax payers to convert their invoice data formats into the format compatible with the GST system.

While this is a big blessing for small businesses and other entities looking for a free and simple solution to comply with GST, there has been disgruntlement among some companies offering services under the GST Suvidha Providers (GSPs) and Application Service Providers (ASPs) labels, who claim that the government's tool could create conflict for market share. 

The offline tool can eat into almost 20-30% of the market share we had projected while building our GST tools," said Himanshu Jain, founder of legal services provider LegalRaasta, which is an ASP and is investing Rs 10-15 crore for the opportunity. Jain said that the company is in the process of raising a new round of funding mainly aimed at boosting its GST offering. 

A similar tone had been adopted by private ewallet and payment companies following the launch of the government's BHIM app in December and the incentives announced for the use of the app in the Budget last month. The GSTN has shortlisted 34 companies, including EY, Tally Solutions and Alankit among others, to serve as GSPs and get direct access to its technology infrastructure, while ASPs can also offer tax return-filing tools and services in collaboration with the GSPs.

Tax-filing platform ClearTax has already invested $3.3 million in buil ding its offerings for GST compliance, founder Archit Gupta said.

"The GSTN tool is likely to be a credible threat in the MSME segment. However, it will also educate the market. Eventually, the market will clear out for those who have the most innovative offering,“ Gupta said, adding that ClearTax's charges for its GST platform, which also includes an offline service, will start from Rs 100 a month.

Some GSPs ET spoke to said they did not see a conflict from the GSTN offline utility.

"We are catering to the mid-sized and large enterprises, while the offline tool will mainly help small taxpayers. There is no conflict," said Bipin Sapra, tax partner, EY India. Alankit, which is building a point-of-sale hardware device to help businesses in tax compliance, says it expects 70% of revenue from the small and informal businesses. However, managing director Ankit Agarwal said that its value-added services will ensure that the GSTN tool does not eat into its share.

"As a GSP, we do not see any threat from the GSTN filing facility. The requirement for GST compliance services is massive and we will offer value added services to extend our dominance in income tax compliance to GST compliance as well," Agarwal said.

Prakash Kumar, CEO at GSTN said the agency is mandated to provide a free service for GST compliance.

"The concern was raised in our first meeting in January last year in which we made clear that we will offer a service to minimise costs for tax payers. However, specialised and customised solutions are still needed which the GSPs can offer," Kumar told ET.

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