Nilekani panel's term extended to meet new GSTN deadline

Work on developing the IT platform is at full throttle, expected to improve interface among tax payers, tax administrators & banks

After missing August deadline to rollout a special purpose vehicle (SPV) for providing common IT infrastructure to the Centre and the states in the Goods & Services Tax (GST) regime, the finance ministry is now planning to set up GST Network 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. Nilekani panel has been given an extension to ensure smooth implementation of the IT platform,” said a finance ministry official, adding some applications were in advanced stages of implementation.

 

Though GST is not likely to be rolled out from April 2013, the work on developing the IT platform is going at full throttle so that it is ready for use by the Centre and the states even under the current regime. It is expected to help improve interface among tax payers, tax administrators and banks.

Three options may be considered for being made available to the states for usage of services provided by GSTN. In the first GSTN will offer the full range of GST services as a utility which states can utilise. In the ‘Limited service model’ states will use GSTN for common registration, return and payments and have their own software for remaining GST functions.

As 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 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. It would have an equity capital of Rs 10 crore. Both the Centre and the states will have a stake of 24.5% each in the SPV, while NSDL will have up to 21%. Three financial institutions will get stake of 10% 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 namely 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 GST network.

While states are at different levels of computerisation, Maharashtra, Tamil Nadu, Kerala, Andhra Pradesh, Karnataka and Gujarat have been ahead of others.