1. The matter relating to putting in place a strong IT Infrastructure and Service back bone which enabled capture, processing and exchange of information amongst the stakeholders (including tax payers, States and Central Governments, Accounting Offices, Banks and RBI) was discussed in the 4th meeting of 2010 of the Empowered Committee of State Finance Ministers (EC) held on 21/7/2010. In the said meeting the EC approved creation of an ‘Empowered Group on IT Infrastructure for GST’ (EG) under the chairmanship of Dr Nandan Nilekani along with five state commissioners of Trade Taxes. Department of Revenue, Ministry of Finance, Government of India vide OM no. S.34011/19/2010-SO(ST) dated 26th July 2010 notified the Empowered Group on IT Infrastructure for GST with following members:
   • Member (B&C), CBEC
   • Additional Secretary (Revenue), DoR
   • DG (Systems), CBEC as Member-Secretary
   • FA, Ministry of Finance
   • Member Secretary, Empowered Group of State Finance Ministers,
   • Member Technology Advisory Group for Unique Projects (TAGUP)
   • Commercial Tax Commissioners of Maharashtra, Assam, Karnataka, West Bengal and Gujarat.
2. The Group was mandated to suggest, inter alia, the modalities for setting up a National Information Utility (NIU/ SPV) for implementing the Common Portal to be called GST Network (GSTN) and recommend the structure and terms of reference for the NIU/ SPV, detailed implementation strategy and the road map for its creation in addition to other items like training, outreach, etc.
3. Prior to this, the Union Ministry of Finance had set up the Technical Advisory Group for Unique Projects (TAGUP) in March 2010 to make recommendations on the roadmap to roll out five major financial projects including GST. TAGUP recommended setting up of National Information Utilities as private companies with a public purpose for implementation of large and complex Government IT projects including GST.
4. The EG held seven meetings between 2nd august 2010 and 8th August 2011 to discuss the modalities. After due deliberations, the EG recommended creation of a Special Purpose Vehicle for implementing the GST System Project. To enable efficient and reliable provision of services in a demanding environment, the EG recommended a non- Government structure for the GSTN SPV with Government equity of 49% (Centre – 24.5% and States – 24.5%) after considering key parameters such as independence of management, strategic control of Government, flexibility in organizational structure, agility in decision making and ability to hire and retain competent human resources.
5. In view of the sensitivity of the role of GSTN and the information that would be available with it, the EG also considered the issue of strategic control of Government over GSTN. The Group recommended that strategic control of the Government over the SPV should be ensured through measures such as composition of the Board, mechanisms of Special Resolution and Shareholders Agreement, induction of Government officers on deputation, and agreements between GSTN SPV and Governments. Also, the shareholding pattern would ensure that the Centre individually and States collectively are the largest stakeholders at 24.5% each. In combination, the Government shareholding at 49% would far exceed that of any single private institution. These recommendations were presented before the Empowered Committee of State Finance Ministers in its 3rd meeting of 2011 held on 19th August 2011 and in the 4th meeting of 2011 of the EC held on 14th Oct 2011. The Empowered Committee of State Finance Ministers (EC) in its meeting held on14.10.11, endorsed the recommendations of the EG.
6. The Government of India approved the proposal for setting up a Special Purpose Vehicle to be called Goods and Services Tax Network on the lines mentioned above on 12th April 2012. Following decisions were taken in this context:
   1. Suitable and willing non-government institutions would be identified and firmed up by the Ministry of Finance to invest in GSTN-SPV prior to its incorporation.
   2. The strategic control of the Government over the SPV would be ensured through measures such as composition of the Board, mechanisms of Special Resolution and Shareholders Agreement, induction of Government officers on deputation, and agreements between GSTN SPV and Governments.
   3. The Board of Directors of GSTN SPV would comprise 14 Directors with 3 Directors from the Centre, 3 from the States, a Chairman of the Board of Directors appointed through a joint approval mechanism of Centre and States, 3 Directors from private equity stake holders, 3 independent Directors who would be persons of eminence and a CEO of the GSTN SPV selected through an open selection process.
   4. Relaxation in relevant rules would be granted to enable deputation of Government officers to the GSTN SPV for exercise of strategic control and for bringing in necessary domain expertise.
   5. GSTN SPV would have a self- sustaining revenue model, where it would be able to levy user charges on the tax payers and the tax authorities availing services.
   6. GSTN SPV would be the exclusive national agency responsible for delivering integrated indirect Tax related services involving multiple tax authorities. Accordingly, any other service provider seeking to deliver similar integrated services would be required to enter into a formal arrangement with GSTN SPV for the services.
   7. GSTN would be funded through a one- time non- recurring Grant- in aid of Rs. 315 crore from the Central Government towards expenditure for the initial setting up and functioning of the SPV for a three year period after incorporation.
7. In compliance of the above decision, GST Network was registered as a non-government, not-for-profit, private limited company under section 25 of the Companies Act 1956 with the following equity structure

   Central Government	24.5%
   State Governments & EC	24.5%
   HDFC	10%
   HDFC Bank	10%
   ICICI Bank	10%
   NSE Strategic Investment Co	10%
   LIC Housing Finance Ltd	11%

8. In brief, the decision to structure GSTN in its current form was taken after approval of the Empowered Committee of State Finance Ministers and the Union Government after due deliberations over a long period of time.
9. As per decision of GST Council, the shares held by non-Government Financial Institutions are being transferred to Central and State Governments so that both hold 50% shares each of GSTN and it becomes a 100% government owned company.

Goods And Services Tax Network

(A Government Enterprise)

Pursuant to approval granted by Registrar of Companies (ROC), Ministry of Corporate Affairs (MCA), Government of India the status of Goods And Services Tax Network (GSTN) has been changed to Government Company in terms of Section 2(45) of the Companies Act, 2013. The Board of GSTN in its 49th Board Meeting held on 30th June, 2022 has approved the conversion of GSTN into Government Company and hence 100% of the shareholding being held by Government (50% with Union Government and 50% jointly with State Governments & UTs) in GSTN.

On 1st of July, 2017, India forayed into the largest and unprecedented indirect tax reform, called GST. GST brought together multiple tax regimes administered by various tax authorities, including central and 36 states and union territories. The complexity of reform required a dependable, scalable and highly secure system to serve all stakeholders involved in administering and enforcing GST law and applicable rules. GST System is a single face to all taxpayers for all statutory activities, such as payment of taxes, registering for new businesses, filing of returns etc.

Designing a system of Unprecedented tax regime at the scale of merging tax systems of 36 states/UTs and CBIC into a single system was a significant challenge of sorts. Without any reference to start with, the architecture was supposed to be flexible, yet robust enough to handle traffic of 1.3 Cr taxpayers (Forecasted number over 5 years). The use of open source technologies and platform design philosophy, enabled GST System to operate without tight integration within GST modules, external entities, technology verticals and platform. The choice of technology principles, tools and architecture also provided for highly available fault tolerant (HAFT) system ensuring failure proofing.

Designing a system on which various external entities could be connected to, was achieved by adopting platform approach which enabled us to integrate banks, RBI, GST Suvidha Providers and many more. Furthermore, requirements were changing fast on account of changes made in the law and rules. For this we used agile method but still lot of rework was required to be done.

In fact, information and data security in GST system was an overarching theme, and multi-tier design ensured that the sensitive and valuable information stayed deep into the technology System. GSTN had to invest into state-of-an-art technologies, processes & governance framework to ensure maximum possible security to stakeholder data. GSTN also ensured “need-to-know-need to do’ principle to establish proper role based data access, which provides for boundaries in which any data set, individually or collectively is made visible. All data in flight is always encrypted. Sensitive data sets within GST Data system is also encrypted at rest as well as on flight.

Training more than 61,000 tax officers in a short period of time on the new system was done by following the train the trainer concept. Training was provided by GSTN to 1924 master trainers, who in turn not only trained remaining tax officers but also the taxpayers and consultants through industry and trade associations. We also released more than 40 short duration videos apart from detailed user manuals. Large number of webinars in various languages have been conducted. After every major release webinars are conducted in multiple languages which are also live-cast on YouTube.

Yet another challenge was enabling large number of return filing on the last date of filing. To achieve this two things were done. The first was to tune the software to increase the throughput. Starting with circuit breaker at 80,000 concurrent users, we have gone 130,000 concurrent users. The other methodology was to provide Offline Tools to enable taxpayers to prepare return offline and then come to portal only for filing the prepared return.

GSTN harnessed the maximum possible impact of emerging technology while developing GST system. GST System has been developed on Open Source technology platform. Almost all components providing services to our stakeholders such as Taxpayers, Government Authorities, Accounting and Audit Authorities are developed in loosely bound well defined APIs. While the information security and technology Infrastructure was procured from leading manufacturers, the core of GST system has been developed using Open source technologies. GST System is designed using Open Data formats and employed an open architecture. This strategy provides for seamless interchange of information between diverse systems. Diverse system can either directly consume this data after downloading or may integrate through exposed REST based APIs.

The technology used in itself are horizontally scalable. This approach ensures that the system capacity can increased by simply throwing some more hardware behind application without effecting affecting the change in user experience. Redundancy within GST System, on stateless layers like web servers, application servers and storage layer ensures high data fidelity. Application availability is not lost in case of a component failure. A new concept of DC/NDC and DR/NDR across two distinct geographies ensures continuity in business, should a disaster strike. The introduction of Near DC (NDC) & Near DR (NDR) ensures zero data loss, should the disaster strike is sudden and does not offer any recovery from the main data center.

This reform has also brought about massive productivity and efficiency amongst its participants including but not only limited to Taxpayers and Tax Officials. Organization of information and digitization of applications in itself brings suitable amount of efficiency in business processes. The resulting transparency automatically leads to efficiency in transactions between stakeholders. The introduction of GST has effectively reduced the information asymmetry which in turn resulted in significant reduction in transaction cost across eco-system. With advent of new technology, the tax compliance has become convenient as the complex business processes have been abstracted behind workflow-based system design.

A centralized approach to bringing complex tax system to a single point interface with stakeholders, has resulted in optimum utilization of system and human resources as well. The availability of granular data on invoice and HSN has proved to be a big tool for improving the compliance. This data for the whole country available at one place can be also used for policy purposes apart from increasing compliance. Use of simple analytics has started throwing excellent information.

Some of the best practices have been implemented while building the IT infra for the GST. GST System is being certified for ISO 27000 and ISO 22301 for security compliance and application services standard. Besides investing heavily in state of an art security apparatus, robust processes framework has also been established with respect to how the GST System shall be accessed by its stakeholders. Access is only provided on need to know need to do basis. A strong role based authorization model has been implemented in GST System so that only authorized personals have access to designated data, after due verification. GSTN has developed strong governance mechanisms to monitor adherence to set processes and principles.

To further strengthen the GST system several key initiatives have been undertaken, and are being continuously evaluated to ensure the system remains available and secure at all times.

As of now, we are continuously improving taxpayer interaction with GST Portal. Our current focus is to ensure availability of all GST Services to our taxpayers and authorities in a seamless manner. Currently emphasis is on making our system more robust in terms of handling load beyond 1.5 Cr taxpayers, ensuring application durability and improving in-site navigation to ensure better user experience.

We are also enhancing our offline tools to provide more freedom at hands of taxpayers to work on compliance related activities offline. This will involve also a tool that will enable taxpayers to do their business accounting in digital way. An effort is being done to enhance our GSP eco-system to onboard more service compliance activities for taxpayers.

GSTN is also engaged in creating many other value adding services like a mobile app for taxpayer facilitation, Business Intelligence using cutting edge AI/ML techniques, improved return filing procedure helping taxpayers have a prefilled return forms for filing and payment.