Being a keen observer and a technical leader at Fidelity Investments and Deutsche Bank in the United States, Vishvajit Sonagara was quick to understand the impact of proper handling of personal finances in the lives of people. There are two types of people – those who have a clear financial objective and would plan, save and invest accordingly; the others are people with no financial planning. The Americans largely belong to the first group of people, and Vishvajit observed how personal financial planning has been generating wealth and prosperity for them.
Back in India in March 2014, Vishvajit was taken aback with the shoddy personal finances scenario in the country. “Financial planning is important but badly missing in the India. There are so many things to do under financial planning. A fixed deposit in banks fetches 10% interest. If you start earning at 23, by the time you reach 30, you can save up to $10 Mn by optimising tax planning,” he said.
Initially he looked at many areas such as online brokerage, but the complexities around it, including the stock exchange licenses, dampened his spirits and he steered away from it. The next item on the list was direct taxation and ITR filing.
Around the same time, he was introduced to Anand Satyapanthi, a Chartered Accountant by profession. Vishvajit had come up with a concept on tax filing, and he laid it bare for Anand. The chartered accountant was hooked, and gave up his job to join hands with Vishvajit to develop the concept; and Quicko was born.
What Is Quicko?
“Quicko is not just about online tax filing. We are neither an accounting firm nor a tech filing platform,” Vishvajit said. “Our clear objective was to build a Do-It-Yourself software that simplified the entire process of tax filing and also aided in finance management. We created Quicko as a platform to focus on financial planning.”
Quicko enables the users to not only file income tax returns, but it also encourages them to build an investment portfolio. When a user logs into the account, he/she is asked to feed in certain important data regarding tax returns filing Form 16, salary, pan card, passport, bank account, monthly EMI (if any) and tax saving investments made, if any. The underlying software identifies the data and throws suggestions around other tax saving plans.
“We have coded a complex rule in the engine that performs income tax calculation on the escrow, calculating on a millisecond basis,”informed Vishvajit. On other platforms, users get the tax summary at the end of the form after filling all the data. Quicko, however, uses real-time algorithms to keep updating the summary as and when users feed data. It is a technology-driven model.
On an average, while other CAs and tax returns filing firms charge somewhere between INR 1500-7500 for income tax returns, Quicko’s fee ranges from INR 500- 1500, averaging at INR 700.
The MVP of Quicko was out and ready in January 2015. But the curtain raiser happened only around July. Within just 40 days, Quicko had received some 125,000 visitors. While the last date for filing tax returns is usually July 31, this year (2015), it was extended to August 31 and because of it, Quicko got 8,500 additional users filing for returns on its platform. Currently, the website has 25000 registered users and gets around 7000 customers every day. By April 2016, it aims to bring around 100,000 users on the platform and 250,000 by 2017.
Tax filing is a data-intensive process, and therefore, web is the primary medium. Around 95% of customers file through the web. The catch of this application is high retention rate and low dropout. Once you start using a platform, you don’t switch easily.
Although recurring, it is still a seasonal business. It peaks during June and July when around 60% of the taxpayers queue up for filing returns. In order to break this seasonal binding, the founders of Quicko introduced value added services around tax planning at a cost of INR 99. According to Vishvajit, there are around 50,000 tax-planning options.
Introduction of more features on the platform like Plan and Drive are in the offing. While Plan would be a full-fledged finance and portfolio management tool, Drive would be a cloud offering where users could access their data on demand.
“These are a natural extension of services. Users upload a lot of data like Form 16, Pan card, passport etc. The drive would be their personal folder on the cloud, which they can access anywhere, anytime; they need not upload the same data every year for tax returns filing and could also pull them for Visa applications or any other purpose,” he explained.
Vishvajit and Anand are not to rest on their success just yet. They plan to take Quicko to higher grounds, and not just limit it to being a tech-enabled e-return intermediary. Over a period of time, Quicko is expected to emerge as a marketplace for certified chartered accountants, wherein they would use the tool to manage customer portfolio. Chartered Accountants account for 60%-70% of tax returns filed.
Challenges And Competitive Landscape
While a majority of tax returns filing is done through CAs, a lot of people are moving to self-filing. In 2014, 32 Mn people paid taxes. There are roughly 15 service providers for e-filing including Income Tax department portals. Cleartax and Taxsmile are major private players in the market.
The biggest challenge in this field is dealing with regulations. Last year, the income tax department announced the closure of a dozen services. For the assessment year 2014-15, when Quicko was just launched, it decided to filter down the e-filing intermediaries. The new regulation prohibited any player operating for less than a year and with less than 500 customers, to operate in the market. Though the order was taken back in two days, Quicko had reached out to corporates (including NGOs, educational institutes, and government departments) to set up filing camps in the centers and invited more than 7000 people to file for tax.
The plan to get into marketplace holds more scope than being just an online tax-filing platform. However, the numbers are very low. In 2012, P. Chidambaram, the then finance minister of the country stated that only 2% -3% of country’s 1.2 Bn population are effective tax payers, furthermore, 89% of this 3% fall in INR 0-5 Lakh salary bracket, who need not pay tax, or follow any tax saving scheme. But for those who pay taxes and need to manage tax returns, Quicko can be the game changer, with its simple interface and affordable services. One area that Quicko needs to seriously focus on is security. Beyond that, the scope for growth and success is huge.