GST NETWORK (GSTN) TO IMPLEMENT GST

[Dr. Sanjiv Agarwal]

The broad framework of GST model proposed for India now being clear, well-designed and well-functioning Information Technology (IT) infrastructure facility would be a precondition and pre-requisite for smooth administration of taxpayers, processing of returns, controlling collections, making refunds, auditing taxpayers, levying penalties etc. in the new regime. On the IT front, all stakeholders had agreed for a common PAN-based taxpayer ID, a common return, and a common challan for tax payment and therefore a common portal providing three core services (registration, returns and payments) would ease compliance. It also stated that the information technology preparedness of states must be improved. Further, the IT infrastructure, unified tax credit clearing mechanism may be put in place.

Union Cabinet has approved a proposal to set up the SPV, namely GSTN, as an exclusive nodal agency for enabling IT infrastructure for smooth introduction of GST.

The GSTN is the comprehensive back end infrastructure network for the management of tax data and reporting of the GST. The Committee noted that the Non Government shareholding in GSTN is dominated by private banks, and this is not desirable. It recommended that the Non Government Institutional shareholding be limited to public sector banks and financial institutions.

GSTN was incorporated on 28 March 2013 under Section 25 of the Companies Act, 1956 (as non-Government, not-for-profit, private limited Company) promoted jointly by Central and State governments (refer Table 5 below). GTSN has a self-sustaining revenue model, based on levy of user charges on tax payers and tax authorities availing its services. The GSTN will provide a front end portal to administer the Inter – State Taxation (IGST). The above network will work as a clearing house mechanism which will pool all the information about taxes levied on the Inter-State transactions and provide data on the amounts to be transferred to the destination state for ensuring seamless input tax credit.

Objectives of GSTN

GSTN has been set-up with the following objectives to act as a pass through interface for dealers.

• Integration of the common GST Portal with the existing tax administration systems of the Central/State governments and other stakeholders.
• Provide common PAN based registration, enable returns filing and payment processing for all states on a shared platform.
• Facilitation, implementation and set standards for providing services to the taxpayer through common GST portal State Governments and other stake holders;
• Build efficient and convenient interfaces between with tax payers to increase tax compliance;
• Carry out research, study best practices and provide training to the stakeholders;

GSTN has been entrusted with the responsibility to develop, operate and maintain a common GST portal which would provide a common and shared IT infrastructure between Central and State Governments, Banks, CBEC, Reserve Bank of India etc. For the purpose of simplicity for taxpayer, uniformity of tax administration, it is also proposed to have digitization of all documents and automation of related processes such as common PAN-based registration; common standardized return for all taxes (with different account heads for CGST, SGST, IGST); common standardized challan for all taxes (with different account heads for CGST, SGST, IGST) etc. Each tax authority will have full flexibility in using this data for in-house automation, integration, and enforcement.

Implementation of GSTN

Considering the broad role of GSTN in reforming Indirect tax system in India, it is understood that GSTN shall be performing following services in a phased manner towards implementation of GST:

Phase 1 : Registration / Return / Payments

Phase 2 : Review of Pilot and project developed by National Securities Depository Limited (NSDL)

Phase 3 : GST Implementation planning

Phase 4 : GST solution Development and Implementation

The Select Committee has noted in the Report on GST Bill that GSTN is expected to complete the development of IT infrastructure and services by March, 2016 i.e. exactly one month before the date from which the Government of India intends to implement it throughout the country. The Select Committee further recommended that GSTN should implement comprehensive training programmes at all levels to allay the fears of consumers, stakeholders, organizations etc. The Select Committee also recommended that it is imperative that not only IT preparedness is at very high level but also prerequisites like IT infrastructure, unified tax credit clearing mechanism, etc. may be put in place for implementation of GST.