ClearTax acquires Karvy’s GST Filing Business

The online tax filing platform ClearTax has acquired the Goods and Services Tax (GST) filing business from Karvy, a financial services firm for an undisclosed amount.

The deal came at a time when the stockbroking unit of Karvy is looking to sell assets and raise capital to clear dues to banks and investors. Apart from the tech platform, the all-cash deal will see ClearTax acquiring only the Karvy Data Management Services GST business, including its about 200 business customers and 25 employees. However, the entity’s ownership will remain with the Karvy group of companies.

ClearTax CEO Archit Gupta said “We purchased the software properties, employee assets and consumer assets, but they will remain with the company. It’s almost an arms-length sort of transaction. It made sense this way because we did not need another corporation to take over their business.”

Archit Gupta added that Karvy’s business was going to be merged into ClearTax’s and that the company was trying to accelerate space consolidation. Gaining access to Karvy’s customer base also comes at a time when ClearTax is looking to take advantage of the mandatory electronic invoicing provision for large companies as of April 1.

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The acquisition is expected to be completed within the next 60 days. It would not be subject to any regulatory scrutiny as it is a separate entity from the one under the regulatory scanner. The regulator has hauled Karvy Stock Broking, an independent entity within the same group, for alleged manipulation of client shares and failure to uphold investor payouts.

The Karvy company is facing a Rs 678-crore shortfall in dues to bank and investor, and it had told India’s Securities and Exchange Board and the National Stock Exchange, the market regulator that the dues would be clear by March 2020.

ClearTax said the acquisition would help grow its base with more 1,500 customers. Also, while Karvy only provided GST filing services to its customers, ClearTax can now tap them with its reconciliation and E-way billing solutions, apart from electronic invoicing. Archit Gupta said that to expand inorganically, ClearTax was actively looking at more acquisitions.

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