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GSTN- How far is privatization justified?

Goods and Service Tax - GST - By: - Pradeep Jain - Dated:- 5-10-2015 Last Replied Date:- 12-10-2015 - Introduction- Already so controversial bill of Goods and Service Tax (GST­­) had another controversy attached to it when The Empowered Committee (EC) of State Finance Ministers decided to incorporate Goods and Services Tax Network (GSTN), a Section 25 (not-for-profit), non-Government, Private Limited Company to provide IT infrastructure for implementation of GST. The main objective assoc .....

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ork. The history:- It was the speech of Budget, 2010-11 when the then Finance Minister - Shri Pranab Mukherjee announced the setting up of a Technical Advisory Group for Unique Projects (TAGUP). TAGUP was set up under the chairmanship of Shri Nandan Nilekani for taking up the technological and system related issues in respect of five projects including GST. It was the report of TAGUP submitted in January, 2011 which suggested that the task of handling the IT related issues in respect of these fi .....

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job to look into technological needs for implementing GST. It is worth mentioning here that TAGUP was responsible for making recommendations in respect of five projects already identified at the time of announcing budget, 2010-11 while EG-IT was responsible to work upon GST network only. Based on the reports of these two groups, it was decided that:- NIU for GSTN should be incorporated as a non-government, not for profit (section 25), Private Limited Company registered under the Companies Act, 1 .....

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GSTN is more threatening as GSTN would be a storehouse of a large amount of critical information. Thus, a majority private shareholding of such company means the critical information of about 6 million taxpayers is in the hands of private players. GSTN has been incorporated as a not-for- profit Section 25 Company. It is a well known fact that private sector works only for profit. It is quite unusual for a private sector entity to invest for public welfare. This very fact induces a serious quest .....

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major cause of concerns of people arguing against the privatization of GSTN. Going by the above arguments, it can be safely opined that such critical information relating to taxpayers must not be given in the hands of such private entities. Here, it would be appropriate to mention the concern raised by the Select Committee of Rajya Sabha which noted that Non-Government shareholding of GSTN is dominated by private banks. This was found undesirable because of two reasons: Firstly, public sector b .....

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TN is beyond understanding when the public sector banks and NBFCs have the requisite amount of capital as well as managerial efficiencies to take care of such sensitive data. Such database can be a reason of wonders, as well as blunders, depending upon the purpose for which it is used. The taxation system of any country is always considered to be the safest when it is under control of the state. Handing over the control of such sensitive data in the hands of the private sector is itself the bigg .....

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his stage, it must be noted that concerns had been raised even by the CBEC regarding ownership and security of such sensitive and confidential data in the dominion of private sector owned GSTN but it was later decided not to question the decision of the empowered committee. This concern was not considered before proceeding with the registration of GSTN, ignoring the fact that CBEC is the most important stakeholder in this transitive tax revolution. What induces more questions is that GSTN, being .....

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n when the economic security of the country itself lies in threat? Modi Sarkar needs to preach what it speaks. Digital India campaign and GST need to go hand in hand. It is important for the State to understand that change in work culture does not necessarily involve privatization of the taxpayers database. Better management capabilities amongst private sector does not mean that economic security of nation be kept at stake. Why privatization? What could be the possible reasons behind private equ .....

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pon the recommendations of TAGUP and EG-IT which had given their reports after in-depth research and a no. of rounds of discussions. The government departments in India are heading towards digitalization. A large no. of governmental projects are being developed within the department or have been outsourced to technological service providers, normally operating at small level. However, the outcomes from these projects have not been able to meet the requirements due to a no. of reasons like lack o .....

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subsequent para. Privatization alongwith data security - EC s outlook:- The probable threats of leakage of sensitive information were being answered by EC while deciding the final proposed structure of GSTN. These suggestions/clarifications given by EC are discussed as follows:- EC has clarified that concerns regarding the data security will be addressed by incorporating related provisions in the Articles of Association of the company entrusted with GSTN. EC has also clarified that the Chairman .....

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