The first India-focused startup in Y Combinator,
this dropout’s venture files 3 per cent of India’s tax today
By Himansu
The year was 2010, and Archit Gupta had just returned from San
Francisco. The startup he was working for, Data Domain Inc, got acquired
by EMC for a whopping $2.4 billion. An alumnus of IIT-Guwahati, in 2008
he had dropped out of his PhD course from University of Wisconsin to
join the startup.
ClearTax co-founder Archit Gupta at the Y Combinator office
Returning home, to Delhi, Archit’s father, a chartered accountant,
was pointing out the lack of information while tax filing. This prompted
Archit to look into the idea of starting a tax e-filing platform. Days
after, he relocated to India, and started up from his garage.
Archit’s guideline was simple: ‘Make no mistakes in people’s taxes’.
And, after five years, that statement still holds strong as one of the
guiding principles for his venture, ClearTax.
Within 10 days of launching, in March 2011, ClearTax was flooded by
1,000 people wishing to file their taxes through the platform. It was a
clear validation of the times to come.
Archit is helped by Ankit Solanki and Srivatsan Chari, whom he met at a hackathon, hosted by him for Paytm in September 2011.
ClearTax
co-founders (Ankit Solanki, CTO, Archit Gupta, Srivatsan Chari, VP,
Business and Operations) with Geoff Ralston at YC in 2014
Easing the filing process
ClearTax helps individuals to prepare and file their taxes. Users
have to submit their Form16 on the platform, which automatically sieves
the necessary data required. This saves users time spent in manually
crunching and feeding data.
Further, ClearTax’s unique ability helps it to compete with the
government tax filing website. It takes about 12 minutes for an average
user to complete the process of filing, as opposed to the two hours
through the traditional route. The platform also provides assisted
services through CAs and tax experts, serving as a marketplace for the
same.
ClearTax charges Rs 600- 13,000 for hiring experts. The value increases with the complexity of the tax filing, Archit says.
ClearTax also has interactive content for users on its platform to better understand the process of tax filings.
So what is the difference between the website by tax department and ClearTax?
Calculations on ClearTax are automated with losses adjusted for the
next year. With no calculations required, what is needed is just the
price and date of sale or purchase.
ClearTax claims that a three percent of India’s taxpayers e-file
their taxes on its platform (about 10 lakh out of the total 3.4 crore
tax filers). The firm also has 10,000 CAs and experts registered, with
close to 70 percent of the users coming from metro cities.
Additionally, the founder claims ClearTax to be the only platform in
the country which has tax on the cloud. This gives individuals ease of
usage from any part of the world.
Tax for businesses
Being a SaaS provider,
the platform offering ClearTDS helps businesses to prepare their TDS
returns, followed by quarterly withholdings. As of now, ClearTax’s
software is used by 5,000 companies, both big and small.
Pricing for the B2C side depends on the complexity of these filings,
followed by the size of the business. Apart from these submissions, the
software also provides intelligence around validation services (like
PAN of employees) and pay package optimisation for tax savings.
The average pricing of the software can be Rs 2,700, and go all the way up to Rs 45,000.
The ClearTax Team
Technology for tax
Having a proprietary technology, the platform is powered by a
distributed system. The beauty of it being that it can be scaled on the
cloud during peak demand, owing to the seasonality of the business.
The platform has three layers of checks enabled by technology. First,
warns customers in case something calls out for a notice by the tax
department. The second is actual comparison, where the taxes filed are
compared with the government guidelines of calculations. The third
entails hard warnings, wherein when a filing looks fishy, ClearTax takes
a call whether to proceed or not.
The firm at present is putting a lot of its investments in machine learning, while aspiring to automate the process of invoicing, bill recognition and data extraction.
By 2014, the company became the first Indian startup to be selected by US-based seed accelerator Y Combinator.
Archit Gupta
Taxing in the future
On aspirations for ClearTax’s future, Archit tells us that the goal
is to work with one lakh businesses and 50 lakh customers by the end of
this financial year. He also hints at the possibility of venturing into
the tax-saving space. On Friday, the company announced the hiring of three former core members of Flipkart
– Prasanth Nair, Director (Fulfilments), Flipkart; Jai Santosh, the man
behind Flipkart Lite; and Akash Bapna, one of the early employees of
the e-commerce giant. Prashanth will lead engineering while Jai and
Akash will look after newer business areas and consumer business segment
for ClearTax.
Tax filing is a niche segment, with some players like Makeyourtax.com and Taxmantra
already functioning in the space. So, either these firms prod towards
the financial advisory segment, or strengthen their own offerings and
work within their niche. ClearTax is doing exactly that in its strategy.
But with newer startups spending as much as a lakh for auditing and
income tax filing, there seems to be enough scope and business
opportunity for players to tap into this space. However, functioning
with a niche, it will be interesting how ClearTax disrupts this space
and achieves scale. Website: www.cleartax.in
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