States set up panel to look into GSTN spending patterns

A committee of ministers will be set up to monitor the expenses of GSTN, which was registered as a not-for-profit company under the Companies Act, 2013


New Delhi: Expressing concern over the lack of supervision of expenses incurred by the goods and services tax network (GSTN), states have decided to set up a committee to look into its spending pattern.

A committee of ministers will be set up to monitor the expenses of GSTN, said ministers after the meeting of the empowered committee of state finance ministers on Tuesday.

GSTN was registered as a Section 25 not-for-profit company under the Companies Act, 2013 with an authorized capital of Rs.10 crore to set up and operate the information technology backbone of GST.

While the central and state governments hold a combined stake of 49%, the remaining 51% stake is divided among five financial institutions—LIC Housing Finance with 11% and ICICI Bank Ltd, Housing Development Finance Corp. Ltd, HDFC Bank Ltd and NSE Strategic Investment Corporation Ltd with 10% each.

GSTN was in the eye of a storm recently after Bharatiya Janata Party MP Subramanian Swamy questioned how a private company could handle sensitive tax information.

“GSTN wants the states and the centre to underwrite all its expenditure. Their estimated annual expenditure is Rs.2,500 crore. But how do you ensure that the expenditure is optimal and they do not write themselves big salaries out of the money? They give all private players sub-contracts for software, maintenance of equipment… how do you ensure that the pricing is fair,” asked Thomas Isaac, finance minister of Kerala. “A committee of ministers will be set up to look into this issue,” he said.

Manish Sisodia, deputy chief minister of Delhi, echoed these concerns.

“It should not happen that GSTN becomes an independent company which just keeps taking funds from the centre and the states and spends as per its own wishes without any accountability. Accountability and deliverables should be clear to the states and to GSTN,” he said, adding that the rates charged by GSTN and the sharing of revenues and costs between states should be clear.

In the meeting, GSTN also received the go-ahead to borrowRs.500 crore from banks to meet its working capital requirements. The interest rate costs will be shared between the centre and the states.

However, states opposed GSTN’s plan to ask the centre and the states to pay higher interest costs than what is being charged by banks by pointing out that it is a not-for profit company.