Cabinet likely to consider converting GSTN into a govt entity today

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.