Modi moves to get hold of GSTN! Here's how Goods and Services Tax Network will be revamped

The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved increasing of Government ownership in Goods and Services Tax Network (GSTN) and change in the existing structure with transitional plan. The latest decision of the Union Cabinet will change the GSTN shareholding pattern, which came in for much criticism because it was majority controlled by private entities and was questioned by many in the past. The decisions include: 

- Acquisition of entire 51% equity held by the Non-Government Institutions in GSTN equally by the Centre and the State Governments 
- Allow GSTN Board to initiate the process for acquisition of equity held by the private companies.
- Restructure GSTN with 100 per cent government ownership that shall have an equity structure split between the Centre (50 per cent) and the states (50 per cent).
- To allow change in the existing composition of the Board of GSTN by inducting three directors from the Centre and the States and three other independent directors to be nominated by the Board of Directors and one Chairman and the CEO.  Thus the total number of Directors is 11.

BJP leader Subramanian Swamy has been one of most visible critique of GSTN shareholding pattern. He had termed the shareholding pattern in the IT backbone of Goods and Services Tax (GST) "a shady organisation" and said it was a "grave security" issue. 

In April last year, PTI had quoted Swamy as saying in the Rajya Sabha: "I wish to bring to the notice of this House a grave national security matter which should receive precedence before we consider the GST Bill, and that is a body private limited company which was created in 2013 called GSTN."

Swamy had then claimed that GSTN has been designed in such a manner that it cannot be audited by CAG and RTI too does not apply to it. "This is a kind of a shady organisation that is coming into being," Swamy said. 

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What is GSTN? 

GSTN is a non-government, private limited company incorporated on March 28, 2013. The Government of India holds 24.5 per cent equity in GSTN and all States, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers, together hold another 24.5 per cent. The remaining 51 per cent equity is with non-government financial institutions - HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd.

The new decision of the Cabinet will help bring GSTN under 100% control of the governments at the Centre and states.