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| SBI, NSDL likely implementors of GST infra |
| Rajesh Bhayani & Sumit Sharma / Mumbai Aug 26, 2010, 00:52 IST |
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The government is likely to appoint State Bank of India as the clearing bank for the proposed Goods and Services Tax (GST) and National Securities and Depositories Ltd (NSDL) as the clearing corporation for implementing the infrastructure required for inter-state tax administration.
A special purpose vehicle (SPV) would be set up for information technology infrastructure in GST. Called ‘GST N’ (Network), it would have the Union government, state governments and technology partner NSDL as stakeholders. Sources say the government is likely to make these appointments official to prepare ground for quicker implementation of GST.
NSDL and SBI will have to ensure the tax, especially in inter-state transactions, is collected and processed without procedural delay and distributed to states on a set schedule.
P Chidambaram, former Union finance minister, aimed to get GST rolling by April 1, but the deadline was re-set to April 1, 2011. The appointment of the two lead organisations would help them prepare and test their systems much in advance, an official said.
Introduction of GST will probably be India’s most ambitious tax reform to bring all states on a par and ensure higher and more transparent collection of taxes by the government. It is hoped that the system can check tax evasion at any level.
Central sales tax will be replaced by the consumption-based GST. In case of inter-state transactions, NSDL might be given special powers to distribute taxes to the states concerned after making a collection in any other state, said an official with knowledge of the matter. The IT network of NSDL and the vast branch network of SBI made them natural choices to ensure that all states get the taxes due to them fairly and quickly, the official said.
NSDL has the experience, as it had set up the tax information network for the income tax department, which is running well.
In 2004, the Task Force on Implementation of the FRBM Act, chaired by Vijay Kelkar, had also said that the existing systems should be used for GST implementation, both at the Centre and at the state level. As the tax information network was set up by NSDL, it seemed a natural choice for GST.
Tax experts believe this is a step in the right direction, but the challenge will be implementation. “At some stage, the system would need to have the ability to process, verify and reconcile the dealer/invoice details uploaded by inter-state suppliers. The other big challenge would be to expand the coverage to states where IT penetration is relatively low, to facilitate online registrations/filings/payments for all taxpayers,” said Pratik Jain, executive director, KPMG.
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