The Goods and Services Tax Network will borrow Rs 800 crore to fund infrastructure costs, PTI reported on Monday. The GSTN – a private company promoted by the central and state governments – has been given the authority to create the necessary information technology infrastructure for the new tax regime.
GSTN chairperson Navin Kumar said that the company will borrow Rs 550 crore as a five-year loan. It will also borrow Rs 250 crore as a working capital loan, Kumar said. “The total authorised and paid-up capital [of the company] is Rs 10 crore. So, Rs 4.90 crore has come from central and state governments and Rs 5.10 crore from private institutions,” he said, adding that they will raise the loans after they receive a Letter of Guarantee from the central government.
Since its incorporation in March 2013, the GSTN has used Rs 64 crore out of the Rs 315 crore sanctioned by the Centre for vendor and employee costs. The central government holds a 24.5% stake in the GSTN, while state governments hold another 24.5%. The remaining 51% is held by companies such as HDFC Bank, ICICI Bank and LIC Housing Finance. However, the GSTN has been criticised by Bharatiya Janata Party leader Subramanian Swamy, who says the government should not be a minority partner in the project.
The GST will bring in a single tax rate to replace India’s complicated current rules, which include Central excise duty, service tax, additional customs duties, value added tax, entertainment tax and so on. It will replace 17 indirect tax levies. The Centre believes this will help create a unified market in the country, avoiding double taxation and increasing compliance.
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