GST Council approves conversion of GST Network into government holding
The Goods and Services Tax (GST) Council has approved ownership change of GST Network (GSTN) structure into a government holding. The council approved converting of the firm providing IT backbone to the Goods and Services Tax (GST) into a government-owned entity from being a private company.
The Goods and Services Tax (GST) Council on May 4, 2018 approved the ownership change of GST Network (GSTN) structure into a government holding.
The council approved converting of the firm providing IT backbone to the Goods and Services Tax (GST) into a government-owned entity from being a private company. The decision was taken at the end of the 27th meeting of the GST council when Finance Minister Arun Jaitley announced that the government would be taking over the stakes held in GSTN by private entities.
• Till now, 24.5 per cent of GSTN was owned by the central government and a similar percentage was held by the state governments collectively.
• The remaining 51 per cent was held by five private financial institutions including HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd.
• The council has agreed to a proposal of buying out the stake of private entities to make GSTN a government-owned entity.
• Following the move, the central government will own 50 per cent stake of GSTN and the remaining 50 per cent would be collectively held by the state governments.
• The collective share of state governments will be pro rata, divided among states in accordance with their GST ratios.
However, the GSTN board shall be allowed to continue the existing staff at existing terms and conditions for a period up to five years and shall have the flexibility of hiring people through contract on the terms and conditions similar to those used by GSTN till now while hiring regular employees.
The existing financial commitments given by Centre and States to GSTN to share the capital and O&M cost of the IT Systems shall also continue.
• The Goods and Services Tax Network - Special Purpose Vehicle (GSTN-SPV) was created as a private limited, not-for-profit company under Section 25 of the Companies Act, 1956 (Section 8 of the Companies Act, 2013) on March 28, 2013.
• The network was created with an objective to provide shared IT infrastructure and services to Centre and States Governments, tax payers and other stakeholders for the implementation of GST in the country.
• Majority of the GST processes including registration, the filing of returns, payment of taxes, processing of refunds is IT driven.
• GSTN handles large-scale invoice level data of lakhs of business entities including data relating to exports and imports.
• Hence, considering the nature of state function performed by GSTN, the council felt that the network should be converted into a fully government-owned company.
• The council decided that the entire 51 per cent of equity held by the non-governmental institutions in GSTN amounting to Rs 5.1 crore would be acquired equally by the Centre and the states governments.