After GST Council’s clearance, Goods and Service Tax Network(GSTN) board on Thursday initiated the process of acquiring 51% stake held by private companies.
GSTN has been set up to provide IT infrastructure and services to the central as well as state governments, taxpayers and other stakeholders for implementation of the GST.
GST Council on May 4 decided to convert GSTN into 100% public owned entity.
According to sources, the entire process of converting GSTN to public entity is expected to cost centre and states about Rs 5.1 crore.
Currently, five private financial institutions - HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd - hold 51% stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime. The remaining 49% stake is with the centre and states.
At present, GSTN has authorised share capital of Rs 10 crore, which means one crore equity shares, each of Rs 10.
The conversion is likely to be concluded in a month's time where the final nod will have to come from the union cabinet, the sources said.
Change in ownership of GSTN would also come up with revamping of the GSTN board.
"The new GSTN board will have 13 directors. The new board will induct 4 directors each from centre and states. It will also have 3 independent directors nominated by the board, along with a chairman and CEO," the sources said.
Apart from this, government will also change the registration of GSTN as per the Companies Act, by converting it from a private entity to a government owned entity. "The restructured GSTN will have to take over both assets and liabilities and inform the lenders accordingly."
GST Council while preparing the proposal of conversion had mentioned that government needs to bring in this change since GSTN is handling large scale sensitive invoice level data of business activity in India including company wise data along with country's import-export which needs to be managed by the government.
However, the council has agreed to allow current staff to continue working for 5 years on contract basis, retaining the same salary structure. The new hiring would be done only after a clearance by the GST Council.
The central board of indirect taxes and customs (CBIC), along with states will bear the cost of operations through user charges.
CNBC-TV18 had earlier reported that finance minister Arun Jaitley asked finance secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100% government company, post which, the proposal was taken up in the GST Council meet on May 4.
Sources said, “GSTN is working like a state-owned company with grants and capital from the government. It is also subjected to audit by the CAG. So why not make it a wholly-owned public sector undertaking?”BJP MP Subramanian Swamy, on multiple occasions had raised concerns over GSTN’s shareholding pattern, terming it “a shady organisation” and saying it was a “grave security” issue.