On Wednesday, Finance Minister Arun Jaitley said, The Union headed by Prime Minister Narendra Modi cleared a proposal to convert GST Network (GSTN), which provides IT infrastructure for the new indirect tax regime, into a 100 % government-owned company.
Finance Minister while briefing reporters about the decisions taken in the Cabinet meeting said after the restructuring of GSTN, ownership will be equally divided between the Centre and states and the Shares for each state will be worked on pro-rata basis in the new structure.
The Centre and states together hold 49 % stake in the GST Network currently. Five private financial institutions -- HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd has remaining 51% stake in GST.
Finance Minister stated that the policy decision to change the ownership structure of the GSTN was taken earlier and was also approved by the GST Council.
Goods and Services Tax Network Board will initiate the process for acquisition of equity held by the private companies. The composition of the board which exists will be changed through the induction of three directors from the Centre and the states and three other independent directors to be nominated by the board and one chairman and the CEO. Thus the total number of directors is 11, an official statement added.
The GSTN Board was incorporated as a private limited company on March 28, 2013, under the UPA government. As it is a Section 8 company under the new Companies Act and hence is a not-for-profit entity.
Whereas, BJP MP Subramanian Swamy had repeatedly raised questions about the dominance of private companies in the GSTN, terming it “a shady organisation” that was a “grave security” issue.
About Section 8 Company
Section 8 of the Companies Act 2013 pertains to a established 'for promoting commerce, art, science, sports, social welfare, religion, education, research, charity, protection of environment. Earlier, Section 8 Company was Section 25 Company of the Companies Act, 1956, It is a legal entity for Non-Government or Non-Profit Organizations.
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