ClearTax, an online tax filing service has obtained the Goods and Services Taxes business of Karvy, a financial services firm. The price of the acquirement currently remains undisclosed.

According to the speculated all-cash deal, ClearTax will acquire the GST business of only Karvy Data Management Services. Other than the tech platform, the deal includes its around two hundred enterprise customers and twenty five employees. Karvy Group of Companies will however continue to have the ownership of the entity. The deal is expected to close in the coming months.

Since the entity has not come under the regulatory scanner, the deal will not be subjected to any scrutiny in terms of regulations. Karvy stock broking, an entity of the same group has been accused by regulators of alleged misuse of client securities as well as its failure in terms of honouring investor pay outs.

For Karvy, the deal will bring some much needed financial relief. The company is attempting to clear dues to banks and investors. Hence, the sale of assets to raise capital is essentially to clear these dues that are causing a Rs.678 crore shortfall for the company. In a statement, Karvy told markets regulator Securities and Exchange Board of India and the National Stock exchange that these dues will be cleared by March 2020.

What is in it for ClearTax? For the tax filing service that was looking to grow inorganically through acquisition, the deal causes a growth in customer base. ClearTax however does this without without taking over Karvy entirely. Archit Gupta, Chief Executive of ClearTax called the deal “almost an arm’s length kind of transaction”

Gaining access to the company’s customer base also comes at a convenient time for the tax filing service. ClearTax could take ample advantage of the requirement of mandatory electronic invoicing for large enterprises from next month. Apart from electric invoicing, ClearTax can now tap Karvy customers with its reconciliations and E-way bill solutions. This will cause an increase in the customer base of ClearTax.