Income tax return e-filing platform ClearTax has said it will acquire the goods and services tax (GST) software business of Karvy Data Management Services, part of the financial services group Karvy.
The acquisition comes at a time when Hyderabad-based Karvy is dealing with the fallout of the Securities and Exchange Board of India (SEBI) placing a ban on its stockbroking arm in November last year on allegations of client fund misappropriation.
Financial details of the deal were not disclosed.
Bengaluru-based ClearTax said in a statement the acquisition of the GST software and services businesses would help boost its own tax clientele. The firm would also be hiring employees from the relevant divisions of Karvy Data Management.
It said the move would help expand its presence in the fintech segment and address the monetary needs of individuals and micro, small and medium-sized enterprises.
“The new enterprises will benefit from all of our GST solutions, including e-Invoicing and will be able to comply with the new regulatory regime smoothly,” Archit Gupta, founder and CEO at ClearTax, said.
The acquisition marks the latest move by ClearTax to grow itself inorganically. In October last year, it acquired audio streaming platform Dose FM.
In April last year, ClearTax acquired TOOTL, an infotainment app that offers personalised content using predictive tools. The firm at the time said it would use TOOTL’s technology to curate personalised tax, finance and compliance-related content on its website.
ClearTax, operated by Defmacro Software Pvt. Ltd, was founded in 2011. Besides e-filing of income tax returns, the firm currently offers a mutual fund investment portal, GST software, an EWayBill generator, digital signature certificate (DSC) utility and business compliance services.
In October 2018, the company raised $54.2 million (around Rs 400 crore), with the Hong Kong-based investment firm Composite Capital Management leading the investment round. Existing investors Sequoia Capital and SAIF Partners were also expected to put in money in that round.
Prior to that, it raised capital in June 2016, when it secured $12 million (over Rs 80 crore) in a Series A round led by Ravi Adusumalli of SAIF Partners.
The Karvy Group, meanwhile, has been mired in legal troubles after a preliminary investigation by the National Stock Exchange showed the brokerage pledged and sold some of its client securities to raise funds for its own use, without client authorisation and in violation of new rules.
On Tuesday, the Telangana High Court refused to stop a probe by the Union ministry of corporate affairs into alleged irregularities at the group’s companies. In December last year, Karvy named Amitabh Chaturvedi as Group chief executive officer of its financial services arm with a mandate to “completely overhaul the governance processes, ensure best practices and to bring in greater fiduciary discipline to these businesses,”.