What is goods and services tax network (GSTN)?

GST is fully technology driven:

Whether you are a businessman or not, you must have encountered this new tax called as GST. You must have also noticed that Goods and Service Tax runs on the internet. And GST catches all the transactions happening in the business world through the internet with minimum human intervention.

Computers, internet are dumb boxes. They don't do anything on their own. They work on instructions given to them and no more. They run on codes, servers, databases, etc. In fact, these various components are connected to form a network, which works in harmony to get desired results, output.

The network created to operate GST is called GSTN - Goods and Service Tax Network.

You may loosely say so. But GSTN is not a simple network of computers working in sync.

Before going ahead, I have a question for you?

How big is your family? Do you have an unmarried sister? Kids? Parents?

Have you ever noticed, how variegated their thoughts, tastes, and decisions are? Did you ever get any chance to get them in consensus? If you have, then you would understand how difficult is it to bring all of them on the same note.

And now it would be far simpler for you to understand the utility of having GSTN if you would recollect that GST law has 38 participants viz 38 governments, which have to work in harmony, consent on technology implementation and collect GST revenue.

Alright, so there is GSTN, the technology arm of GST

Government incorporated GSTN a non-profit making government company to handle the technology portion of GST system.

In it, the Government of India holds 24.5% equity, all States of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5%. In toto, Govt owns 49%.

Balance 51% equity is with non-Government financial institutions.

GSTN is a unique initiative:

Before GST, the Centre and State indirect tax administrations worked under different laws, regulations, procedures, and formats. Consequently, the IT systems worked as independent sites.

With GST in place, for the first time, a uniform, common interface between the Centre, the States and the taxpayer has been laid down. They all share a robust IT infrastructure through GSTN.

GSTN is unique as it is a single body which seeks to administer the entire process starting right from registration of a person to scrutinizing the returns and settling the assessment proceedings.

Thus, in short, GSTN brings all the IT related functions for indirect tax dept under one roof.

GSTN is very robust and handles complex scenarios.

GSTN involves an integration of the entire indirect tax ecosystem. It brings all the tax administrations (Centre, State, and Union Territories) to the same level of IT maturity with uniform formats and interfaces for taxpayers and other external stakeholders.

It provides a reliable IT Infrastructure and service backbone which enables capturing, processing and exchange of information amongst the stakeholders (including taxpayers, States and Central Governments, Accounting Offices, Banks and RBI).

GST is a destination based tax. It involves the interstate trade of goods and services (IGST), which needs a robust settlement mechanism amongst the States and the Centre. GSTN provides that.