Government plans to take control of GSTN from private entities
11 April 2018
The government proposes to turn the Goods and Services Tax Network (GSTN), the information technology backbone of the indirect tax regime, into a fully or majority state-owned agency by buying out the stakes of private entities that currently hold a 51-per cent stake.
Finance minister Arun Jaitley is reported to have asked finance secretary Hasmukh Adhia to examine the possibility of raising the government’s stake in GSTN, so that the government would have a controlling stake in the indirect tax IT backbone.
GSTN is a non-government, non-profit company in which Housing Development Finance Corp, HDFC Bank, LIC Housing Finance Ltd, NSE Strategic Investment Corporation Ltd and ICICI Bank together hold a 51-per cent stake. The centre and state governments together hold the remaining 49 per cent.
The government holds that the goods and services tax (GST) data should be under government control and hence the proposal to increase the centre’s and state governments’ shareholding in the firm so as to ensure controlling stake of GST Network (GSTN).
Currently, the centre and state governments each hold a 24.5-per cent stake in the company. “States and the centre will continue to have equal stake,” the official said.
The government has informally discussed the proposal with the private sector shareholders, he said, adding that the proposal will be taken to the GST Council after it is finalised and then to cabinet.
Since GSTN is a not-for profit entity, the stakes will be bought back at the original price without any premium, he said.
The government is yet to decide on the quantum of stake to be increased and officials said the council could also approve government takeover of the entire company.
GSTN, which acts as the IT backbone for the new indirect tax regime, is also a repository of sensitive information of over 10 million taxpayers. It was originally conceived as an entity with flexibility and freedom of a private company, but concerns of data security demands that government takes over its control.
GSTN, which is currently headed by Ajay Bhushan Pandey, who is also the chairman of Unique Identity Authority of India (UIDAI), has an authorised capital of Rs10 crore.