The government is not planning to change the ownership structure of the Goods and Services Tax Network (GSTN), which provides the information technology backbone of the new indirect tax regime to be rolled out from April 1, 2017, finance ministry sources said. Many members of parliament, including BJP’s Rajya Sabha MP Subramanian Swamy, have criticised the GSTN ownership structure, in which private companies own majority with 51 per cent combined equity stake.
“There is no rethink on the GSTN ownership issue in the government. This structure was prepared by the previous UPA government and we think it is well thought out,” a senior finance ministry source said, adding that some of finest private companies owning part stake in the GSTN would help in creating a more professional and service-oriented entity.
“Since millions of invoices will have to be matched each day on the tax network, it is important that it is run be competent people from the IT and other sectors. Government may not be able to provide relevant human resources,” the source said, asking not to be named.
GSTN was incorporated in March 2013 as a not-for-profit, non-government, private limited company to provide IT infrastructure and services to the central and state governments, taxpayers and other stakeholders for implementation of the GST.
The Government of India holds 24.5 per cent equity in GSTN and all states of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers, together hold another 24.5 per cent. The remaining 51 per cent equity is with non-government financial institutions, where LIC Housing Finance owns 11 per cent stake and ICICI Bank, HDFC, HDFC Bank and NSE Strategic Investment Corporation owning 10 per cent each.
MP Subramanian Swamy had last month written to Prime Minister Narendra Modi raising objection to the majority stake for private entities in the GSTN. He had said ownership structure of the network should changed and private companies replaced by public entities to make GSTN a fully government owned vehicle. Swamy argue that GSTN would handle sensitive tax data and it is best dealt by government company.
Even the Rajya Sabha Select Committee that scrutinised the Constitution Amendment Bill for introducing GST had said that presence of private companies, with significant foreign holding, in GSTN is not desirable, Swamy had said.
GSTN will facilitate online registration, tax payment and return filing. IT major Infosys was given the Rs 1,380-crore contract last year to build the network and maintain it for five years after it becomes operational.