Goods and Services Tax Network (GSTN), the agency in charge of building the technological infrastructure for the implementation of GST, has received over 200 applications from IT and fintech companies who seek to become GST Suvidha Providers, but there are very few startups among them.
The GST Suvidha Provider (GSP) will offer products and services to help tax payers and businesses in compliance. While leading tech companies such as SAP India, Tally Solutions, Vayam Technologies and Mastek Holdings have sought to become GSPs, ClearTax seems to be among the few startups to have applied. The problem is the stringent criteria related to paid-up capital and turnover.
An ITITeS or financial company looking to become a GSP must have paid-up (raised) capital of at least Rs. 5 crore and an average turnover of at least Rs. 10 crore during the last three financial years.
“We kept the criteria stringent because, at the beginning, we want companies who are tested and whom we can rely on, since we are also building our own infrastructure. Also, we cannot handle a large number of GSPs right in the beginning,“ GSTN chairman Navin Kumar told ET. “However, we are not barring startups from applying, and we have given a notification that even companies that don’t fit the criteria can apply and we will consider them in the next phase of selecting GSPs,“ he added.
Software think tank iSPIRT said it was pushing to relax the GSP criteria to help startups. “iSPIRT is looking for an open policy that allows any startup or a small company to become a GSP. Instead of turnover, the GSTN could use other instruments like surety bonds or bank guarantees of Rs. 5-10 lakh for a period of 12 to 18 months,“ said Sudhir Singh, a policy expert at the iSPIRT.
“The real concern of GSTN should be the product that the GSP develops. To ascertain the application security and ICT infrastructure of GSPs, they can use third parties to verify that the technical criteria is met,“ Singh said. Becoming a GSP can also open a business opportunity as the selected companies are allowed to turn their services and products into a revenue model.
ClearTax’s B2B business of providing software products to businesses brings 60% of the company’s revenue, and is expected to grow to 65% after integration with the GST ecosystem, said CEO Archit Gupta.“Startups have an important role to play in the GST ecosystem for their speed of innovation and the quality of the products. They should be encouraged to become GSPs,“ he said. – http://www.economictimes.indiatimes.com [20-10-2016]