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GSTN to be owned by govt? FinMin looking at issues related to proposal

Currently, HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co, LIC Housing Finance Ltd hold 51% stake in GSTN

Press Trust of India  |  New Delhi 

Illustration: Ajay Mohanty
Illustration: Ajay Mohanty

The is examining various issues, including overhaul of procedures and the salary structure of employees as part of the proposal to convert Network (GSTN) into a government company.

These two issues, along with other transitional and operational nuances, would be placed before the for consideration once the Council clears the proposal of turning into a majority or fully-owned government entity, a source told

had earlier this month asked to "examine the possibility" of converting into a majority government company or a 100 per cent government company. provides the IT backbone for the new indirect tax regime.

Currently, five private financial institutions -- HDFC, HDFC Bank, ICICI Bank, and -- hold 51 per cent stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime.

The remaining 49 per cent stake is with the centre and states.

The current structure of GSTN where financial institutions hold the majority 51 per cent stake gives the entity flexibility in quick through tendering process.

However, turning it into a government entity would mean that -- that currently occurs on a real-time basis -- will have to be in sync with those of and state-owned companies, a source said.

Another aspect that would come into play could be salary structure. Currently, the employee remuneration is at par with those in the private sector, but transforming GSTN to a government entity would change that, the person privy to the development added.

These issues are currently being discussed by the officials within the Finance Ministry, the source said, adding the ministry is hopeful of a seamless transition given that the (GST) collections have stabilised over the last 9 months and businesses are familiar with the systems.

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 roll out.

GST, which subsumed over a dozen local taxes, was rolled out on July 1, 2017. Over one crore businesses are registered on the GSTN portal.

GSTN is a Section 8 company under the new Companies Act and hence is a not-for-profit entity.

The source said that there are no hindrances from the private shareholders in selling their stake to the government because GSTN does not give dividend.

The is in favour of making GSTN a wholly-owned company with 100 per cent shareholding, but a final call would be taken by the GST Council, headed by Jaitley and comprising state counterparts, in its next meeting.

After GST Council's clearance, the proposal would go to the

First Published: Sun, April 22 2018. 12:42 IST
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