written by khatabook | November 5, 2019

Know about the GSTN - Goods and Service Tax Network in India - Functions of GST Network

The introduction of the new Goods and Services Tax (GST) revolutionized the Indian taxation system. To successfully implement it, the government needed a strong Information Technology backed wide infrastructural support, and hence the GSTN came into the picture. GSTN stands for Goods and Service Tax Network and is a non-profit, non-government organisation that administers and manages the IT system of the Goods and Service Tax portal. The Goods and Service Tax Network (GSTN) provides a one-stop solution for integrating and sharing information among the states and the centre. It acts as a bridge between the government and the taxpayer. The Goods and Service Tax Network provides several services through the GST portal, such as registration, filing and processing of GST returns, payment of GST, calculation and processing of refunds, etc.

Did you know? Infosys built the GST portal under a contract worth Rs. 1380 Crores for implementation of the online mechanism of GST in India.

Structure of the GSTN

GST network is registered as a non-profit non-government organisation. It is a private limited company registered under Section 8 of the Companies Act 2013. Mr Ajay Bhushan Pandey is the GSTN chairman, and the authorised capital of the non-profit company is ₹10 Crores. The GST network structure comprises 51% share held by private institutions and 49% by the government (with 24.5% share held by central government and state government each). The equity structure of the GST network can be summarised as under:

Central government

24.5%

State government

24.5%

HDFC

10%

HDFC Bank

10%

ICICI Bank

10%

NSE Strategic Investment Company

10%

LIC Housing Finance Limited

11%

Formation of the Goods and Service Tax Network:

The committee of state finance ministers created an empowered group on IT infrastructure for GST to suggest and recommend an implementation strategy and road map to create the GST network.

The Empowered Group offered the following suggestions:

  • The strategic control of the government on GSTN to securely manage the sensitive information of the taxpayers that were to be shared on the GST network.
  • It also considered the key parameters while framing the GST network, such as independence of management, agility and decision-making, recruitment of competent human resources and technology specification.
  • It recommended that the GST network be a non-government organisation to ensure operational freedom.

The empowered committee approved the above recommendations of the empowered group of state finance ministers, the Union Government, and the non-profit company. In this way, the GST network was set up to provide a single and secured platform for GST related activities to the taxpayer, state government, central government and other stakeholders.

Also Read: A Guide to Filing GST Annual Returns (GSTR-9)

Features of GSTN:

  • Shared IT Infrastructure and integrated platform for multiple functions: GST Network is the backbone of India's vast Goods and Service Tax system. It provides an IT backed integrated platform for sharing GST information among the centre and the state government. It enables multiple functions such as registration, filing of returns, calculation of Input Tax Credit, allocation of Integrated Goods and Service Tax, etc.
  • Strategic control of the government: With a 49% combined central and state government share, the strategic control lies with the government. The government collectively holds a larger share than any other private institutions’ share.
  • Trusted national information utility: It is a trusted entity that receives, authenticates, maintains, and delivers the taxpayers' goods and service tax-related information. It can provide reliable data and information to the stakeholders.
  • Confidentiality of taxpayers information: As the government owns the strategic control of the GST network, maintaining the security and confidentiality of the taxpayer's sensitive information is the government's responsibility.
  • Revenue Model of GSTN: As per this model, the central and the state governments will pay the user charges equally. The share of States will be divided based on the number of registered taxpayers of each state.
  • Government and private ownership: The GST ownership is divided so that the strategic control rests in the hand of the government with the majority share, and the operational freedom is also maintained by including the private players. 

Functions of Goods and Service Tax Network: 

The GST Network provides a user-friendly interface through the GST portal to provide GST related services online. Some of the functions of the GST Network are:

  • Registration of taxpayers and unique GST identification numbers to the registered taxpayers.
  • Facilitate GST return filing and processing
  • Accepting Goods and Service Tax payments from taxpayers by managing and integrating payment gateways with the banking system.
  • Notifying taxpayers about tax payment due dates, registration status and other information.
  • Allocation of Integrated Goods and Service Tax (IGST) among the Centre and the States.
  • Calculation of Input Tax Credit of the taxpayers.
  • Reconciliation of GST on imports
  • Identifying and tracking invoice mismatching
  • Providing MIS reports to the government and the tax authorities
  • Calculation and process refunds to the taxpayers

Objectives of Goods and Service Tax Network:

  • To provide a user-friendly integrated platform to all the taxpayers, government, and other stakeholders for smooth functioning of the Goods and Service Tax related procedures.
  • Form an efficient GST eco-system with the help of other agencies.
  • To ensure the safety of the taxpayer's sensitive data.
  • Bring transparency to the tax system.
  • Facilitate easy and quick compliance procedures in paperless mode.
  • Help the tax authorities to administer the tax system
  • Provide a common medium for sharing and exchanging information among the Central government and the State Government.

Also Read: Key Advantages and Disadvantages of GST for Businesses

What is the role of GSP in the GST Network:

The full form of GSP is Goods and Service Tax Suvidha Provider. These are Government approved application service provider that provides an online platform to access GST portal services for several tax-related formalities.  The GSP acts as an intermediary for businesses to enable paperless compliance of GST related provisions. The application service providers (ASP) provide applications or software to assist in preparing and filing returns with the help of data shared by the businesses or organisations.  The government approved and authorised ASPs to get GST Suvidha Provider or GSP status. The GSPs can seamlessly connect with the GST network to enable the taxpayers to perform registration, return filing and other procedures conveniently.

The government has approved around 32 GSPs across India to provide applications and services to the taxpayers for carrying out several tax compliance activities.

What is the need for GSP? 

There is a wide variety of taxpayers such as SMEs, small businesses, large enterprises etc. These taxpayers need different facilities for GST compliance, for example, converting purchase or sales register data in GST compliant format, uploading invoices, filing of returns, etc. Manual uploading of invoices and consolidating data from various branches or departments can be difficult. Hence, a platform is required to assist the taxpayers in conveniently sharing and uploading invoices and other information for automated processing. Therefore the government approved the third-party application service providers or the GSPs to make GST compliance easy for the taxpayers.

Functionalities of GSP:

The taxpayers can directly use the GST portal for all GST related compliances, and the GST Suvidha Provider (GSP) is an additional platform provided to the taxpayers. It is not mandatory to use GSP, and it is an optional facility to make collating and processing data convenient and quick for businesses. Some of the functionalities offered by the GST Suvidha Providers are:

  • Collect and collate the invoices from ERP, Excel or other accounting software of the organisation and convert them into GST compliant format.
  • Reconcile the auto-populated data of the organisation from the GST portal with the purchase register.
  • Enable quick and convenient filing of returns by updating information stored in the application.
  • Accurate and faster computations of bulky data.
  • Connect with GST Network for smooth flow of data.
  • Provide a secure and user-friendly medium for storing and processing taxpayers' information.
  • Provide a consolidated view of all the branches of the organisation.

Role of tax officers in the implementation and functioning of GSTN:

Tax officers carry out the following responsibilities -

  • Approve or reject the application of registration of taxpayers.
  • Carry out tax administration procedures such as audit, appeal, refund, investigation, etc.
  • Identify and track fraudulent taxpayers.
  • Scrutiny and assessment of taxpayers.
  • Study business analytics and MIS reports for tax compliance.
  • Solve taxpayer grievances and settle disputes, if any.

Also Read: GST Latest News Every Business Owner Must Know

What is the difference between GSTN and GSTIN?

 

GSTN 

GSTIN

Full-Form

Goods and Service Tax Network

Goods and Service Tax Identification Number

Meaning

The Goods and Service Tax Network (GSTN) is set up to provide IT infrastructure for easy compliance and management of the country’s Goods and Service Tax system.

GSTIN is a unique 15-digit number assigned to each taxpayer at the time of registration. It is mandatory for businesses with annual turnover above ₹20 Lakhs.

Objective

The GST Network brings all the taxpayers, centre and state government and other stakeholders under a single framework for tax compliance.

The GSTIN is used by the government and tax authorities to track financial transactions and other tax details of the registered taxpayers.

GSTN project partner:

Infosys, India's second-largest software provider, is the GSTN project partner. The Goods and Service Tax Network (GSTN) has given the contract to Infosys to design, develop, deploy and maintain the GST portal.

Conclusion: 

The Goods and Service Tax system is based on the concept of 'one nation, one tax'; the Goods and Service Tax Network (GSTN) is the tool used by the government to bring all stakeholders on a single platform. The GSTN has developed a vast GST eco-system to ensure smooth flow and exchange of information. It works as a national utility to store and deliver the taxpayer's data in a secure, authentic and transmissible format. The introduction of the Goods and Service Tax Network by the government has changed India's entire working of the indirect tax system. It is also a step towards the 'digital India' campaign of the government and has successfully increased tax compliance and transparency in the tax structure. 

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FAQs

Q: Is GSTN a government organisation?

Ans:

No, the Goods and Service Tax Network is a non-profit, non-government organisation. It is a private company formed under section 8 of the Companies Act 2013.

Q: Who is the GSTN project partner?

Ans:

Infosys is the GSTN project partner, and it has built the GST portal under a contract with the Goods and Service Tax Network to build and maintain the GST portal for five years.

Q: Who is the GSTN chairman?

Ans:

Mr Ajay Bhushan Pandey is the GSTN chairman.

Q: Are GSTN and GSTIN same?

Ans:

No, GSTN stands for the Goods and Sevice Tax Network, which is IT-enabled infrastructure support for the implementation of GST, whereas GSTIN is the Goods and Service Tax Identification Number, which is a unique 15 digit number issued to the taxpayers while registering under GST.

Q: What are the features of the Goods and Sevice Tax Network?

Ans:

The Goods and Service Tax Network features include an online platform, integrated IT-enabled framework for tax compliance, revenue model, strategic control of the government, confidentiality of taxpayers' sensitive information, etc.

Q: What is the structure of the Goods and Service Tax Network?

Ans:

The equity structure of the Goods and Service Tax Network is divided between the Government (49%) and the private players (51%).

Q: What is the full form of GSTN?

Ans:

GSTN stands for Goods and Service Tax Network.

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