GST network to be set up by the end of this financial year

Having missed the August deadline to roll out a special purpose vehicle (SPV) to provide common information technology (IT) infrastructure to the Centre and the states in the goods & services tax (GST) regime, the finance ministry is now planning to set up the GST network (GSTN) by the end of this financial year.

It has extended the tenure of Empowered Committee on GSTN headed by Nandan Nilekani by one year to September 2013.

“The SPV would become operational shortly and all states might become part of GSTN by the end of this year. The Nilekani panel has been given an extension to ensure smooth implementation of the information technology platform,” said a finance ministry official, adding some applications were in advanced stages of implementation.

 

While GST might not be rolled out from April 2013, the work on developing the IT platform is going on at full throttle so that it is ready for use by the Centre and states even under the current regime.

It is expected to help improve interface among taxpayers, tax administrators and banks.

Three options to be offered to the states for usage of services provided by the GSTN are under consideration.

In the first, GSTN will offer the full range of GST services as a utility which states can utilise.

In the second, “limited service model”, states will use GSTN for common registration, return and payments and have their own software for the remaining GST functions.

As a third option, states can go for “application programming interface model” and have their own software for flexibility.

However, they will have to adhere to the common registration, return and payment formats defined by the GSTN and ensure that the rights of both the states and the Centre are protected in terms of getting information and ensuring timely settlement of share of taxes.

The SPV would be incorporated as a not-for-profit company in which the government will retain strategic control.

RELOADED STRATEGY

• Finance ministry misses August deadline to roll out a special purpose vehicle to provide common information technology (IT) infrastructure to the Centre and the states in the goods & services tax regime
   
• Ministry extends tenure of Empowered Committee on goods & services tax network (GSTN) headed by Nandan Nilekani by one year to September 2013
   
• While GST might not be rolled out from April 2013, the work on developing the information technology platform is going on at full throttle so that it is ready for use by the Centre and states even under the current regime
   
• Three options to be offered to states for usage of services provided by the GSTN are under consideration
   
• Under the first option, GSTN will offer the full range of GST services as a utility which states can utilise
   
• Under the second option — limited service model — states will use GSTN for common registration, return and payments and have their own software for the remaining GST functions.
   
• Under third option, states can go for "application programming interface model" and have their own software for flexibility

It would have an equity capital of Rs 10 crore. Both the Centre and the states will have a stake of 24.5 per cent each in the SPV, while NSDL will have 21 per cent.

Three financial institutions will get stakes of 10 per cent each. It will have a self-sustaining revenue model based on levy of user charges on tax payers and tax authorities availing its services.

Pilot projects are going on in 11 states with NSDL as the technology partner. Representatives of various tax authorities, test users from banking industry, and trade diasporas are involved in an objective testing phase.

Prototypes of probable models of key business processes — registration, return filing and payment of taxes are developed. There will be a common portal that could be shared by all the states and the Centre and act as an IT platform to integrate Central and state indirect tax regime.

The use of permanent account number as a common identifier in both direct and indirect taxes is likely to enhance transparency and check tax evasion.

Subsidy provided for various goods and services can also be linked with GSTN.

While states are at different levels of computerisation, Maharashtra, Tamil Nadu, Kerala, Andhra Pradesh, Karnataka and Gujarat have made considerable progress.