Goods and Services Tax Current Affairs
The Union Cabinet has approved conversion of Goods and Services Tax Network (GSTN) into government-owned company. Government will now own 100% of GSTN which is IT backbone to GST regime. Majority of Goods and Services Tax (GST) processes including registration, filing of returns, payment of taxes, processing of refunds is IT driven and mainly through GSTN.
Earlier in May 2018, GST Council, chaired by Union Finance Minister Arun Jaitley and comprising state finance ministers had agreed to make GSTN a government company with Centre owning 50% stake and states together holding the remaining 50%. Over 1.1 crore businesses are registered on GSTN portal. With enhanced role of GSTN from just collecting taxes to data analytics, Government had felt that it should now be the majority owner in the IT backbone provider.
Goods and Services Tax Network (GSTN)
GSTN was set up as not for profit, non-Government, private limited company in 2013. It was established primarily to provide IT infrastructure and services to Central and State Governments, tax payers and other stakeholders for implementation of Goods and Services Tax (GST).
Currently, Centre and states together hold 49% stake (24.5% each) in GSTN. The remaining 51% is owned by five private financial institutions- ICICI Bank, NSE, HDFC Ltd, HDFC Bank and LIC Housing Finance Ltd. Its revenue model after GST was rollout out consisted of User Charge to be paid by stakeholders who will use the system and making it self-sustaining organization.
Union Finance Ministry has constituted Group of Ministers (GoM) to monitor and resolve IT challenges faced in implementation of Goods and Services Tax (GST). It also Committee on Exports to look into issues of exports.
Both committees were constituted following the decision taken in 21st GST Council meeting in Hyderabad, Telangana.
Group of Ministers (GoM): It will be headed by Bihar Deputy Chief Minister Sushil Kumar Modi. It will be assisted in its work by Chairman, Goods and Services Tax Network (GSTN) and Chief Executive Officer, GSTN. It was formed after states had raised issue of glitches being faced by taxpayers in filing their GST returns on GSTN.
Committee on Exports: Its mandate is to look into issues of exports and recommend GST Council suitable strategy for helping the sector in the post-GST scenario. It will be headed by Revenue Secretary Hasmukh Adhia.
Exporters raised concern related higher cost of working capital owing to difficulties in availing input tax credit and refunds after implementation of GST regime. Before GST, exporters enjoyed upfront tax exemption on goods to be exported, but now, they have to pay GST before procurement of goods and services.
Moreover, exporters also need to pay IGST on imported inputs. However, they can avail input tax credit after sale within domestic tariff area or after sending their shipments outside country. The exporters can then claim unutilised credit as refund, process in which their capital gets blocked with government and resulting in raising of their operating cost.