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Goods and Services Tax Network ( GSTN) Complete Details

Goods and Services Tax Network ( GSTN) Complete Details

Goods and Services Tax Network : Dear Seller, As you are aware, the Government of India is proposing to introduce Goods and Services Tax (“GST”), a comprehensive indirect tax levy subsuming all central and state levies. In terms of the draft GST law available in public domain, all sellers operating on an e-commerce marketplace are mandated to have a GSTIN ID. Accordingly, as a first step, the states have initiated the process of enrolment for the existing TIN registered sellers on the GST portal. We encourage you to initiate the registration process as this will facilitate smooth transition and ensure that you continue to avail our services post implementation of GST.

Who needs to enroll for GST?

All sellers listing taxable goods for sale at e-commerce portal will be transitioned to GST.

Why do you need to enroll for GST?

Enrollment for GST will ensure smooth transition to GST regime. The state VAT authorities have already started enrolling for GST on the GST Portal.

What next?

In case you haven’t enrolled till now, please initiate the process at the earliest. For ease of reference, the tutorial video made available by the Goods and Services Tax Network (GSTN) and other relevant details can be referred here.

Goods and Services Tax Network ( GSTN) Complete Details

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Goods and Services Tax Network :  Goods and Services Tax (GST) is a broad-based, comprehensive, single indirect tax which will be levied concurrently on goods and services across India. It will replace most of the Central and State indirect taxes such as Value added Tax (VAT), Excise Duty. Service Tax, Central Sales Tax, Additional Customs Duty and Special Additional Duty of Customs. GST will be levied at every stage of the production and distribution chains by giving the benefit of Input Tax Credit (ITC) of the tax remitted at previous stages; thereby treating the entire country as one market.

Goods and Services Tax Network : Introduction of GST in India is perceived to be the most ambitious initiative in the arena of indirect tax reforms. It would change the Indian tax structure and pave the way for modernization of tax administration. The GST Bill has recently been approved by both the houses of Parliament and is in the process of being endorsed by the State assemblies. It needs endorsement from fifty percent or 15 of the assemblies before it receives Presidential assent.

Goods and Services Tax Network ( GSTN) Complete Details

Goods and Services Tax Network : Goods and Services Tax Network (GSTN) is a Section 8 (under new companies Act, not for profit companies are governed under section 8), non-Government, private limited company. It was incorporated on 28 March 2013. The Government of India holds 24.5% equity in GSTN and all States of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5%. Balance 51% equity is with non-Government financial institutions. The Company has been set up primarily to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST).

Steps involved in GST Enrollment Process

  • The State Government will be communicating the Provisional ID and Password
  • Access the GST common portal, Create your new username and password using the Provisional ID and Password
  • Login to GST portal with your new login credits
  • Fill the enrollment application and provide Business details without missing any mandatory fields
  • Verify the auto populated details from the State VAT system
  • Sign the Enrollment Application electronically
  • Submit the Enrollment application and necessary documents
  • Once submitted the documents will be verified by the GST system
  • If the details are satisfactory an Application Reference Number(ARN) will be issued, the ID status will be set to Migrated
  • On Appointment date Provisional ID status becomes Active. A Provisional Registration certificate will be issued

Getting the Provisional ID for GST

Andaman and NicobarDaman and DiuKarnatakaNagalandTripura
Andhra PradeshDelhiKeralaOrissaUttar Pradesh
Arunachal PradeshGoaLakshadweepPuducherryUttarakhand
AssamGujaratMadhya PradeshPunjabWest Bengal
ChandigarhManipurHimachal PradeshChhattisgarhMeghalaya
 Tamil NaduJammu and KashmirTelanganaJharkhandMizoram
Dadra and Nagar Haveli

Enrolling for GST

Documents Required for Enrollment Other than the provisional ID and password provided, ensure that you have the following documents/information with you, at the time of enrolling for GST.

  • A personal email id to receive confirmation as well as acknowledgement.
  • Bank account number and IFSC code.
  • Proof of business, such as a partnership deed (PDF or JPEG file of the same), registration certificate, and LLP Agreement, whichever applies. Keep the soft copy of the above mentioned documents to upload easily onto the website.
  • A photograph of partners, owner or Karta (in case of HUF) in a JPEG file with a size not exceeding 100KB.
  • A proof of appointment of authorized signatory, in either PDF or JPEG file, not exceeding 1MB.
  • Bank account details (soft copy), with the image of bank account number, branch address as well as the address of the account holder (front page of the passbook, or bank statement). Again, ensure that the file size does not exceed more than 1MB.

Goods and Services Tax Network ( GSTN) Complete Details

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Goods and Services Tax Network : GSTN SPV was incorporated on 28 March 2013 as a Non-Government, not for Profit (Section 25), private limited company registered under the Companies Act, 1956. The Authorised Share Capital of the company is INR 10,00,00,000 (Rupees ten Crore only) with 49% equity of the company held by the Government (24.5% Central Government and 24.5% all State Governments/UTs put together) and 51% equity is held by private financial institutions namely ICICI Bank, HDFC Bank, HDFC Ltd, LIC Housing Finance and National Stock Exchange Strategic Investment Corporation Ltd.
The strategic control over GSTN is with the Government given the sensitivity of the role of GSTN and the information that would be available with it. The strategic control of the Government over GSTN is ensured through measures such as composition of the Board, mechanism of Special Resolution and Shareholders Agreement, induction of Government officers on the deputation and agreements between GSTN and Governments.

Goods and Services Tax Network ( GSTN) Complete Details

Goods and Services Tax Network : GSTN has been initially funded through a one-time non-recurring Grant in-aid of Rs. 315 crores from the Central Government towards expenditure for the initial setting up and functioning of the SPV for a three year period after incorporation. After rolling out of GST, the Revenue Model of GSTN shall consist of User Charge to be paid by stakeholders who will use the system and thus it will be a self-sustaining organisation.

Board of Directors :

The Board of Directors of GSTN SPV comprises of 14 directors with 3 Directors from the Centre, 3 from the States, a Chairman of the Board of Directors appointed through a joint approval mechanism of Centre and States, 3 Directors from the private equity stakeholders, 3 independent Directors who are persons of eminence and the CEO of GSTN selected through an open selection process.

Initial Operations :

GSTN initially started its operations from The Janpath Hotel with a small team of 4-5 employees. However, after recruitment of employees both from the open market as well as deputationists, the size of the team and operations have grown substantially and, therefore, the company shifted its office to a modern, more equipped and spacious premises at Aerocity, New Delhi in December 2015. The registered office of GSTN has since been changed to 4th Floor, East Wing, Worldmark-1, Aerocity, New Delhi-110037.

Organisation Structure :

Today GSTN has a team of 46 full time employees including 37 from the Private Sector and 9 deputationists from the Government. The Organisation Structure of the Company broadly consists of 3 verticals, viz. Technology, Services and Support each headed by an Executive Vice President (EVP) reporting to the CEO. The Technology team is to be entirely sourced from the Private Sector, Services Team from deputationists consisting of Tax Officials from the Central and State Governments and the Support team is a mix from both Private Sector as well deputationists.

Goods and Services Tax Network ( GSTN) Complete Details

Goods and Services Tax Network : The GSTN could be a key factor in ascertaining whether or not the GST regime will effectively lead to transparency and ease of doing business in India, compared to the current indirect tax regime.

Although the final GSTN model has not been made public, various committees have presented their models to demonstrate how GSTN should ideally function. One such report submitted under the guardianship of Mr Nandan Nilekani in 2009 represented an ideal GST IT system. The report proposed tax autonomy for states and also proposed to prevent adverse tax leakages from the system.

A figurative model of the information flow proposed in the report is given hereunder:

Information flow as per the proposed report :

  1. The taxpayer files the GST return with the GST portal;
  2. The taxpayer pays GST to the bank and uploads the challan details to the GST portal (there is no actual movement of funds taking place within the GST portal);
  3. The GST portal keeps a copy of the GST return for analysis and then sends the GST return details, in near real-time, to the respective state and the Central Board of Excise and Customs (CBEC) for further legal scrutiny;
  4. The state and CBEC then provide an intelligence report to the common GST portal which crosschecks the details of the GST return filed by the taxpayer and then confirms them;
  5. The common GST portal then reconciles the assessed GST liability with the challans;
  6. A match of assessed GST liability with challans paid shall be a closure of assessment and mismatch of the same will lead to intimating department officials about the default.

Simultaneously, the fund flows could be mediated with the help of the Reserve Bank of India (RBI) and structured in a way that the State GST (SGST) funds of the states are directly transferred from the taxpayer to the state treasuries and Central GST (CGST) funds directly move to the Centre. The RBI could help compute inter-state settlements. IGST could then be further settled between the states and Centre by RBI.

Goods and Services Tax Network ( GSTN) Complete Details

Goods and Services Tax Network : The Empowered Committee of State Finance Ministers first set up an Empowered Group on IT infrastructure for GST headed by Mr Nandan Nilekani on 26 July 2010. This was followed up with the incorporation of a ‘Not for Profit’ section 25 non-government company on 28 March 2013. The GSTN company has primarily been set up to monitor IT infrastructure and services to the central and state governments, taxpayers and other stakeholders, for the implementation GST in India.

The government awarded the GSTN development contract to Infosys for INR 13.8 billion. It will be a five-year contract post the GST implementation. Infosys has previously worked with the government on the Ministry of Corporate Affairs’ digitisation process. Being a top tier IT private entity, they can easily leverage their vast pool of experience with the government and other tax authorities to meet the required deadline of 1 April 2016.

Mandate of GSTN 

The GSTN has been mandated to provide the following additional services to the various stakeholders:

  • Provide common and shared IT infrastructure and services to the Central and State Governments, Tax Payers and other stakeholders.
  • Partner with other agencies for creating an efficient and user-friendly GST Eco-system.
  • Encourage and collaborate with GST Suvidha Providers (GSPs) to roll out GST Applications for providing simplified services to the stakeholders.
  • Carry out research, study best practises and provide Training and Consultancy to the Tax authorities and other stakeholders.
  • Provide efficient Backend Services to the Tax Departments of the Central and State Governments on request.
  • Develop Tax Payer Profiling Utility (TPU) for Central and State Tax Administration.
  • Assist Tax authorities in improving Tax compliance and transparency of Tax Administration system.
  • Deliver any other services of relevance to the Central and State Governments and other stakeholders on request.

Major Milestones

  • India’s second largest IT services Company Infosys through a rigorous competitive bidding process, in which other big IT companies like TCS, Wipro, Tech Mahindra and Microsoft also participated, bagged the contract of Rs 1,380 crore to be the Managed Service Provider (MSP) for GSTN. The MSP shall build the technology infrastructure for Goods and Services Tax known as the GST System Project (GSTSP), a common Portal for the use of different Tax Payers, Tax Administrators and other stakeholders which includes common Registration, Return and Payment services. The MSP will build the system and once it is ready they will operate it for five years. The Contract with Infosys was signed on 6th November 2015.
  • The Business Requirement Documents (BRD) for the various modules of the proposed GSTSP and the System Requirement Specifications (SRS) are in the process of finalisation. The Development Teams of MSP will now embark upon development of the System at its Bangalore Development Centre. The training programs for the benefit of various stakeholders will also be launched shortly.

Goals of the GSTN

As GSTN tends to bind indirect tax data across the country, it shall also achieve the following goals in order to streamline business processes in India:

  • Simplification: Simplify the process for taxpayers by creating a uniform process of filing returns.
  • Cost reduction: Lower compliance cost and collection cost.
  • Reduction in tax evasion: Minimise the risk of tax evasion and reduction in leakages due to the smooth flow of information between the Centre and states.
  • Automation: Digitise and automate processes through e-registration, e-payment and e-return.
  • Credit availability: Enable a smooth flow of credit by the government on the basis of returns filed and revenues reconciled against challan data from the bank.
  • Uniformity: Create uniformity in policy administration.

Road Ahead

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The GSTN is an important thread that will bind the indirect tax IT systems of all states with the Centre. Unfortunately, barring a few, many states are yet to automate their indirect tax procedures. Ideally, the states have to start upgrading their IT systems as early as possible to reach the level of sophistication in processes and procedures required for GSTN in the near future.

Internationally, Malaysia has been the country to have most recently adopted GST. Although the Malaysian government had given a significant time frame for industries to implement GST, most had not updated their software for complete GST compliance. There were various apprehensions at the operational level regarding GST implementation which aggravated post-implementation problems.

Given the required technology upgrade, the industry must take appropriate measures to train themselves and their vendors to make sure there is no leakage of credits. Thus, the industry has to get acquainted with the IT systems in order to ensure a smooth transition from current indirect tax procedures to procedures under GSTN. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Goods and Services Tax Network ( GSTN) Complete Details

Goods and Services Tax Network Related links :

GST Indian Journey Book by N K Gupta

GST Registration Procedure – Online Simplified

GST compensation bill to detail revenue foregone by states

GST Tax Slab Rates : Council fixes 4-level GST rate structure

GST Tax Rate Structure : Rates fixed at 5%, 12%, 18%, 28%

Good And Service Tax ( GST ) – Frequently Asked Fourteen Questions

Goods and Services Tax Network ( GSTN) Complete Details

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