State FMs discuss funding of GSTN corpus

Funding of GSTN, the company formed to create IT backbone for rollout of GST, seems to have split the states with some favouring bank borrowing route while a few others want it to be a contributory corpus.
Different models of funding the Goods and Services Tax Network (GSTN) -- the special purpose vehicle formed to set up the information technology backbone for rolling out the indirect tax regime that will replace myriad local levies -- was discussed at the meeting of Empowered Committee of State Finance Ministers today.
One of the model for creating the corpus is to have the funding by Centre and the states. This proposal drew sharp reaction from some states who felt why should "they just give money and sit there," sources said.

The other model is to borrow from banks and then pay interest rates, which can be shared between the Centre and states.
The funding, sources said, will not be one-time in nature and it will flow as per the need and the ultimate structure will come in the Bill that will come up during the winter session of Parliament.
Chattisgarh Industry Minister Amar Agarwal claimed it has been decided to take bank loan for setting up the corpus.

He said the corpus fund was to be earlier set up with 50 per cent funding between Centre and states.
However other participants of today's meeting did not endorse his statement of a decision having been reached on drawing loan for setting up the corpus.

The Committee Chairman and West Bengal Finance Minister Amit Mitra said GSTN is the software based non-profit entity, which has been meeting the empowered committee for two-and- half-years.
"Still there are some operational issues which are to be sorted out. The GSTN has been sharpening its capacity to handle the complex tax as GST," he said.
Delhi Deputy Chief Minister Manish Sisodiya said in future it should not happen that GSTN becomes an independent company that just keeps taking funds from the Centre and the states and spends as per its own wishes without any accountability.
"Major concern is that GSTN's accountability, deliverables should be clear to the states and to GSTN. Its financial model was decided today and every one was in consensus that both Centre and states should contribute," he said.

GSTN provides information to help taxpayers (buyer-seller pair) to reconcile differences in sales and purchase data themselves within specified time.
GSTN is a not-for-profit, non-Government, private limited company. It was incorporated on March 28, 2013.
The Government of India holds 24.5 per cent equity in GSTN and all states of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5 per cent. Balance 51 per cent equity is with non-Government financial institutions.
The company has been set up primarily to provide IT infrastructure and services to the central and state governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST).