India’s burgeoning SaaS business face tax spanner

India’s burgeoning SaaS business face tax spanner

These days there is significant change in the way software products are offered. Earlier, purchasing software implied heavy investment in infrastructure, installation, on-boarding, etc. However, the software-as-a-service (‘SaaS’) model, being cost effective and efficient in many ways compared to traditional software products, has fast become quite popular. The ease with which software services/ subscriptions can be provided remotely and the easy maintenance are some of the salient features of SaaS, which have contributed to its growing popularity.

India’s SaaS business too has shown tremendous growth. Growing at a compounded annual growth rate of 30%, revenue from Indian SaaS business reached $ 3.5 billion as of FY 2019-20. Further, even in overseas markets, Indian SaaS products are quite popular, which is evident from the fact that in the past couple of years, 75% of the demand for Indian SaaS products came from overseas.

The present talent pool, comprising of both technically skilled engineers and product managers, are the primary drivers for the success of Indian SaaS products. The first generation of Indian SaaS startups has already established a robust presence in the market.