Launch of GST needs mega infrastructural support including IT facilities. So far, the Centre and State indirect tax administrations worked under different laws, regulations, procedures and formats and consequently they have independent IT systems. Integrating them for GST implementation and bringing them under an entirely new indirect tax system and administration need fresh institutional arrangement. For this task, the government has created Goods and Services Tax Network (GSTN).
What is GSTN?
The Goods and Services Tax Network (GSTN) is a non-government non-profit private limited company created for providing the front end and back end IT and infrastructural support for the working of GST. It is registered as a non – profit Company under the New Companies Act in March 2013.
Given its non-government nature, the shareholding is important. Here, the Governments –centre, states plus UTs hold 49% of GSTN. Central government holds 24.5% while the remaining governmental share of 24.5% is held by states and UTs. It has an authorized capital of Rs.10 crore to establish and operate the IT backbone of GST.
The remaining 51% share is divided among five financial institutions—LIC Housing Finance with 11% stake and ICICI Bank, HDFC, HDFC Bank and NSE Strategic Investment Corporation Ltd with 10% stake each.
Though the shareholding looks non-government, governments have more say in the management of GSTN. The Central and the state governments together have seven members in the 14-member GSTN board, including the Chairman. Private share-holders have only three members. The remaining three are independent members and a board-appointed chief executive officer. This means that the strategic control of the company lies with government.
What are the functions of GSTN?
The GSTN as a back end infrastructural support mechanism has the main responsibility of providing a well-built IT infrastructure and the related services to the Central and State Governments, taxpayers and other stakeholders, for the implementation of GST. GSTN would be integrating the common GST portal and will be connected with the existing tax administration IT systems.
Administrative functions of GSTN
GSTN as a tax administration platform is deeply connected with the existing administrative mechanisms. The common GST Portal developed by GSTN will function as the front-end of the overall GST IT eco-system. The common GST portal by GSTN will process applications for registration, payment, return and prepare MIS/ reports.
Similarly, the IT systems of CBEC (Central Board of Excise and Customs) and State Tax Departments (except Model I states) will function as back-ends. The work of back-end operation is to handle tax administration functions such as registration approval, assessment, audit, adjudication etc. Fifteen Model I state and CBEC are developing their own dedicated backend systems as per the available information. This means that GSTN is doing the backend for remaining States and UTs.
Functions of GSTN
Following are the main functions of GSTN:
(i) facilitating registration;
(ii) filing and forwarding the returns to Central and State tax authorities;
(iii) computation and settlement of IGST;
(iv) matching of tax payment details with banking network;
(v) providing various Management Information System reports to Governments.
(vi) analysis of tax payers’ profile; and
(vii) running the matching engine for input tax credit.
What is GST Suvidha Providers or GSP?
GSP or GST Suvidha Providers are third party IT vendors who develop the web or mobile base interfaces for taxpayers to interact with the GST network.