Cabinet approves new GSTN structure; Body to be 100% government owned

In order to take hold of not-for-companies, the Union cabinet on Wednesday approved acquisition of privately-held equity in the goods and services tax network (GSTN).

After this acquisition, both Central and State government will hold 50 per cent share each. (Image: PTI)

In order to take hold of not-for-companies, the Union cabinet on Wednesday approved acquisition of privately-held equity in the goods and services tax network (GSTN). The proposal, approved the by the GST council in May, makes the not-for-profit organisation 100 per cent owned by the government. According to a press release, the government which currently owns 49 per cent stake in the technological arm of the new indirect tax regime will buy out remaining 51 percent equity owned by non-government entities including HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance. After this acquisition, both Central and State government will hold 50 per cent share each. The GSTN board will now have a total of 11 directors – three each nominated by centre and states government, three independent, a chairman along with one chief executive officer (CEO). However, the GSTN board will be allowed to retain the existing staff on the same terms for five years. “The restructured GSTN, with 100 per cent government ownership, shall have equity structure between the Centre (50 per cent) and the states (50 per cent),” the government said. The GSTN was formed as a private limited company on March 28, 2013 under the UPA government. It is a Section 8 company under the new Companies Act and is, therefore, a not-for-profit entity. The inception of the council was done to provide shared IT infrastructure and services to the Centre and the State governments, taxpayers and other stakeholders for the implementation of the GST. As per government officials, the decision was taken keeping in mind that a huge amount of GST-related data should completely under government supervision as it contain sensitive information of millions of taxpayers of the country. A large chunk of GST processes including registration, filing of returns, taxes payment and processing of refunds are IT-driven. GSTN handles the invoice data of lakhs of business entities, including data on exports and imports.