New Delhi, May 4, 2018
GST Council okays acquisition of entire 51% equity held by non-governmental institutions equally by Centre and State govts
The Goods and Services Tax Network - Special Purpose Vehicle (GSTN-SPV) will shed the tag of private company and become a 100 per cent Government-owned company. GSTN is the IT backbone of unified indirect tax system.
The GST Council, headed by the Union Finance Minister, Arun Jaitley, at its 27th meeting on Friday, approved the proposal.
Currently, GSTN is 24.5 per cent owned by the Central Government and a similar percentage is held by the State governments collectively.
The remaining 51 per cent is held by non-Governmental institutions. These institutions include HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd.
Now, the Centre will hold 50 per cent and the remaining will be with State governments on a pro rata basis.
“GST Council decided acquisition of entire 51% of equity held by non-governmental institutions in GSTN amounting to Rs. 5.1 crore, equally by the Centre and the State governments and allow GSTN Board to initiate the process for acquisition of equity held by the private companies,” a Finance Ministry statement said.
It also mentioned that the GSTN Board will be allowed to continue with the existing staff at existing terms and conditions for a period up to five years.
Also, it will have the flexibility of hiring people through contract on the terms and conditions similar to those used by GSTN till now while hiring regular employees.
GSTN was created as a private limited, not-for-profit company under Section 25 of the Companies Act, 1956 by the Government on March 28, 2013 with an objective to provide shared IT infrastructure and services to the Centre and States governments, tax payers and other stakeholders for the implementation of GST.
Although, Government is not the majority equity holder in the company, still, through various mechanisms, it is under the strategic control of the Government.
Majority of the GST processes, including registration, filing of returns, payment of taxes, and processing of refunds, are IT-driven, and GSTN is handling large-scale invoice level data of lakhs of business entities, including data relating to exports and imports.
Considering the nature of ‘state’ function performed by GSTN, the Council felt that GSTN be converted into be a fully-owned government company.
Finance Secretary Hasmukh Adhia said that a formal process for conversion will be placed before the Union Cabinet and accordingly, GSTN will become a 100 per cent Government-owned company.
[The Hindu Business Line]