GSTN’s Ownership, Accountability And The Challenge Of Working With A ‘Moving’ Target

It is unusual, if not rare, for a company so intrinsic to the collection of taxes, to be majority owned by private entities. A BJP member of parliament referred to the ownership of the Goods and Services Tax Network (GSTN) as “shady”. But GSTN Chairman Navin Kumar explains that only a non-government, private-owned company would have been up to the task of setting up a national information technology (IT) network, which for the first time integrates the indirect tax administrations of the Centre and states.

Who Owns GSTN?

Incorporated in 2013 as a not-for-profit company, GSTN is also a non-government company. Fifty one percent of it is owned by private firms including two top banks, two housing finance companies and a subsidiary of India’s leading stock exchange – the National Stock Exchange. The rest is owned by the central and state governments.

In response to that, Kumar recounted to BloombergQuint how the ownership structure of GSTN was finalised.

• The government set up a Technology Advisory Group for Unique Projects (TAGUP) under Nandan Nilekani to device the modalities for implementing large IT projects for the government. Five specific projects were referred. One of them was GST.
• That committee recommended the nature of the organisation that should implement such projects. It said this should be structured as a non-government, private company with a public purpose.
• The Empowered Committee of State Finance Ministers, in a meeting held in July 2010, approved the creation of an Empowered Group on IT Infrastructure for GST under the chairmanship of Nilekani and five state commissioners of trade taxes.
• The Empowered Group took into account the recommendations of TAGUP and it proposed an ownership structure for GSTN. It was decided that the government should own 49 percent and 51 percent should be with private sector companies in order to make this company a non-government, private company.