Sunday, February 19, 2017

This doesn't make sense - GSTN vs CBEC

When government is struggling to clarify, and simplify existing tax regimes and trying to shed more lights to complex, hard to read (sometimes unwanted) taxation rules it is amusing (at the same time irritating) to see two of its arms fight each other.

In latest series of events Goods and Services Tax Network (GSTN) is under investigation by Service tax department of Central Bureau of Excise and Customs (CBEC). Assessing officer issued a summon against GSTN CEO Prakash Kumar and asked him to appear (in person/through representative) on February 22, with balance sheets, bank statements and income tax return forms. Summon also asked the company to produce details of funds from GoI and payments details towards Infosys (Infosys was commissioned for implementing the GST project).

By the way GSTN was set up as a non-profit, non-government company in March 2013. Ownership of GSTN is as follows,

Central Government: 24.5%
State Governments: 24.5%
HDFC: 10%
NSE Strategic Investment Corporation: 10%
HDFC Bank: 10%
ICICI Bank: 10%
LIC Finance: 11%

Total Assets: 143 Crores, Revenues 16.3 Crore (as on Mar 31, 2016)

GSTN receives grants in aid from government for its capital requirements.

Now what make this problem ugly is, if two government’s arms are not able to settle taxation issues then how we can expect things will go smooth when private, public limited companies are involved. Already retrospective taxation and other ad-hoc items created more mess than clarify things. Central government needs to step in and make rules clear, simple and create an environment where companies know what to pay and government know what it will get. Anything short of it will only make things worse. If taxation issue is creating problems for an entity which was created to make things simple in the first place, then forget about higher expectations from ease of doing business rankings.



1. GSTN's  infra firm under scrutiny for tax evasion - Business Standard

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