Cleartax launches into stock brokerage and wealth management services

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Mumbai: Tax management platform Cleartax will make a foray into equity brokerage and wealth management services, eyeing a share of India’s fast-growing retail investment market that has seen a massive influx of new traders to the amid the Covid-19 pandemic.

The Y Combinator-backed startup plans to inject Rs 100 crore into the development and promotion of its new app – Black, which will serve as both a tax management and an investment platform for retail clients, said Founder and CEO Archit Gupta told ET in an interview.

“We realized that the influx of millennials onto trading apps over the past few months has largely been in search of opportunities to maximize returns,” Gupta said. “Our goal is to provide personalized and organized long-term investment services.”

The accounting startup, backed by Composite Capital and Elevation Capital (formerly SAIF Partners) as well as Y Combinator, headquartered in Mountain View, Calif., will now compete directly with fintech companies such as Zerodha, Upstox and Paytm Money as well as with incumbents such as Motilal Oswal and ICICI Securities.

Gupta said the company aims to onboard one million customers over the next six months, including those who already use Cleartax for tax filing and e-invoicing.

It will leverage data from tax returns and the profile of clients using its platform to create curated investment portfolios, Gupta said, noting that the company primarily offers long-term investment solutions to solve the “Robinhoodization of the Indian retail investment market.

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Last week, US-based online stock trading platform Robinhood was fined by the US Securities and Exchange Commission for allegedly targeting young, inexperienced stock traders in order to increase traffic on its platform.

Explaining its business model, Gupta said the company is aiming for monetization through subscription-based services on Black. The company’s main revenue driver will continue to be its B2B GST filing platform, which oversees $250 billion worth of annual tax filings for its corporate clients.

“With Black, we want to focus on three things. We want to be a long-term investment avenue for millennials through products curated through advanced data analytics,” Gupta said. “We also want to offer solutions for saving and managing taxes on this platform.”

In addition to mutual funds and SIPs, the new Cleartax app, which went live earlier this month, will also offer low-yielding investment instruments such as the National Pension Scheme, Fixed Deposits and the employee pension fund.

Gupta also welcomed the recent relaxation of standards by the Securities and Exchange Board of India to allow fintech companies to enter the mutual fund market.

“This decision will democratize the market and significantly reduce costs. It (the easings) allows players like us to come in and expand the market,” he said.

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