GST Network, Explained

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It’s a private company that runs the GST show. Here’s what taxpayers need to know about it

According to its website, the Goods and Services Tax Network, or GSTN, is registered under Section 25 of the Companies Act. This not-for-profit, non-government, private limited company was incorporated on March 28, 2013. The Centre holds a 24.5% stake in GSTN; States, including Delhi and Puducherry, and the Empowered Committee of state finance ministers hold another 24.5%. The rest — 51% — of the equity is held by a few banks. Why was GSTN set up in the first place? Reports suggest its primary responsibility is to make the rollout of the Goods and Services Tax — which the Parliament enacted recently — by providing the information technology infrastructure and services to the Centre, States, tax payers and other stakeholders. GSTN holds an authorised capital of Rs.10 crore.

GSTN is chaired by Navin Kumar, former chief secretary of Bihar. He had served in the finance ministry in the early 1990s as private secretary to Yashwant Sinha and then in the department of economic affairs under Montek Singh Ahluwalia when economic liberalisation had begun. GSTN is expected to assist in PAN-based registration of traders, besides filing of tax returns and payment system. About 50 people currently work for GSTN. They work towards setting up an IT network that will connect more than 10 million taxpayers with the Centre, States, various banks, RBI and tax authorities. It has a swanky 30,000 sq ft office near the Indira Gandhi International Airport in New Delhi. As things stand now, the whole IT apparatus for GST should be ready by the deadline —1 April 2017. But will that happen? To discuss that, we must know what GSTN has been doing since its inception. In 2015 the company had called for offers from IT companies to help it build the common GST portal, on which all applications will run, to bring the necessary hardware for running these applications and to operate the whole system for five years.

According to Prakash Kumar, GSTN’s CEO who had earlier worked with Microsoft India and Cisco after his stints at the government service, the company had received offers from companies such as TCS, Infosys, Wipro, Microsoft and Mahindra. Infosys was selected after a national bidding process. In November 2015, Infosys received the contract and GSTN asked it to start developing the application. The company was asked to wait for their ‘signal’ for placing orders for hardware. Once the Rajya Sabha cleared the Constitutional Amendment on GST, Infosys was asked to go and buy the hardware. How much does the whole project cost? GSTN estimates suggest it’s more than Rs.1,300 crore. This includes the cost of hardware, software and operations for five years. The entire hardware will be imported, installed, tested and made ready by December. GSTN plans to get everything ready by 31 March.

That’s a close deadline given the way things move on the GST front. The GST software will converge the current VAT, service taxes and central excise registrations. GSTN currently does not have the systems for executing it. It says work is on and will be ready soon. The company is yet to test the software and the back-end, to see if they can deal with nearly 10 million migrations and other processes. Looks like all’s well at the GST front, but some critics suggest that the private party presence in GSTN might influence its performance and priorities and can completely cut off government entities in the rollout of one of the most ambitious tax reforms in the country.

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