Cabinet may consider converting GSTN to government entity tomorrow

By: |
New Delhi | Published: September 25, 2018 7:02:14 PM

The Union Cabinet is likely to consider Wednesday the proposal to convert GST Network (GSTN) into a government-owned company.

GSTN, GST Council, Arun Jaitley, LIC Housing Finance Ltd, Hasmukh Adhia, NSE Strategic Investment Co Currently, the Centre and states together hold 49 per cent stake in GST Network, the company that provides IT backbone to the new indirect tax regime.

The Union Cabinet is likely to consider Wednesday the proposal to convert GST Network (GSTN) into a government-owned company. The GST Council, chaired by Union Finance Minister Arun Jaitley and comprising state finance ministers, had in May agreed to a proposal to make GSTN a government company, with Centre owning 50 per cent stake and states together holding the remaining 50 per cent. “Converting GSTN to a government company may be considered by the Cabinet tomorrow,” a source said.

Currently, the Centre and states together hold 49 per cent stake in GST Network, the company that provides IT backbone to the new indirect tax regime. The remaining 51 per cent is held by five private financial institutions – HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd.

Jaitley had in April asked Finance Secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100 per cent government company. Following this, the proposal was put up for approval before the GST Council in May. The GSTN was incorporated 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 hence is a not-for-profit entity. The government stake in GSTN was initially kept at 49 per cent and incorporated as a private company to “allow adequate flexibility and freedom” to “ensure timely implementation of the IT infrastructure” prior to the GST rollout.

Goods and Services Tax (GST), which subsumed over a dozen local taxes, was rolled out on July 1, 2017. Over 1.1 crore businesses are registered on the GSTN portal. With enhanced role of GSTN from just collecting taxes to data analytics, the government felt that it should now be the majority owner in the IT backbone provider.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Indo-Pak relations: New Delhi, Islamabad trade potential stands at $37 billion, says World Bank report
2Finance Minister to review PSU banks: Arun Jaitley to meet bank heads today; may discuss NPAs
3GST relief for MSMEs: Disappointing news – Sector may not get more benefits before 2019 polls