NEW DELHI: Before the final roll-out of the Goods and Services Tax (GST) on April 1, 2017, the GST Network (GSTN) will avail a Rs. 550 crore loan from IDFC Bank. Initially, there were talks on the town about the proposed government funding. Even though the finance ministry resisted it, the government will be the guarantor for the loan it takes from the bank.
Commenting on the development, a GSTN official disclosed that the network has decided to avail a Rs. 550 crore loan from IDFC bank till April 1, 2017. The government has assured a guarantee for that. This will be used towards expenditure on salaries and payment to Infosys.
Infosys will develop GSTN
To recall, Infosys has been given the task to design and develop a comprehensive IT system for the smooth transition from the current tax regime to GST. The GSTN did a tendering process for the loan. IDFC Bank has won the bid from over 26 banks who applied to offer loans.
The expenditure department, under the Central Board of Excise and Customs, had seriously objected to government funding for a private body like GSTN.
Total cost for GSTN pegged at Rs. 3000 crore
As per finance ministry sources, the initial plan was to a massive Rs. 3000 crore. The network reportedly asked the government to fund. However, the GSTN official has clarified that the total cost of the project, which includes the salaries, interest cost, security operations for five years of service and the on-going development period of one-and-a-half years. This will cost Rs. 3000 crore.
It seems that Infosys has cashed on the opportunity for a huge sum of money. However, the GST IT platform requires a loan only till the roll-out.
The official, who declined to reveal the identity, added that they need money only until the official rollout time. The money will be used to develop various services and hardware. The GST will start getting money from April 1, once the GST has been rolled out officially.
GSTN private but has government funding
Responding to media, a senior government official disclosed that the GSTN had been framed very effectively. Even though it is a private company, it has an effective government control. Hence, you have to hire professionals at competitive prices.
The GSTN is a non-government, private limited company incorporated on March 28, 2013. While the government holds 49 percent, the private shareholding is currently pegged at 51 percent.
The GSTN will provide a common platform for registration, filing returns, and e-payment. The system will also have a standard GST portal, with the tax administration systems of the Centre and states.