IV Unit

IV Semester M.Com

Syed Babu H.B

M.Com., M B A., MA in Economics
 IV Semester, M.Com Goods and Services Tax-II

GST Network and

4
Unit Technology
GST Network: structure, vision And Mission, Powers and functions, Goods and Service Tax
Suvidha Providers (GSP): Concept, Framework and Guidelines and Architecture to integrate with
GST System. GSP Eco system (Theory Only).

Meaning of GST network (GSTN)

GSTN is a nonprofit, non government organization. It will manage the entire goods IT system of
the GST portal, which is the mother data base for everything GST. This portal will be used by the
Government to track every financial transaction, and will provide tax payers with all services from
registration to filling the tax and maintaining all the details.
It is aimed at managing entire It system of the GST portal. It has the responsibility to build and
manage the information technology infrastructure and the services for implementing GST including
the programing and developing the software, updation in the software, which would be used for filing
of GST returns, filing application for registrations etc.

Structure of GSTIN
1. Organizational Structure of GSTN
Though GSTIN is a non-government organization, there has been a strategic control it by the
Government of India. Structure of GSTN is designed is as follows:

a) Chairman: chairman of the GSTN would be nominated through a joint applroval mechanism of
Central and State Governments.

b) Board of Directors: Board of Directors of GSTIN would comprise of 14 directors. Out of these 14
directors, 3 directors would be nominated by the Central government, 3 by the State governments,
1 would be the Chairman who would be nominated by the Joint apporoval mechanism of the

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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

Center and State governments, 3 would be nominated by the private equity shareholders, 3 would
be nominated as persons of eminent importance and 1 CEO would be selected through a open
process

2. Equity structure of GSTN:

Equity structure of the shareholding pattern of GST Network is as follows:
Shareholder Shareholding %
Central Government 24.5%
State Government 24.5%
HDFC & HDFC Bank 20%
ICICI Bank 10%
NSE Strategic Investment Co. 10%
LIC Housing Finance Ltd. 11%
Total 100%

 Private players hold 51% of the shares in GSTN. Central Government and State Governments
aggregately hold 49%. Therefore, GSTIN is a non-government organization.
 The authorized capital of the GSTN is Rs. 10 crores and also GSTIN has been granted a non-
recurring grant of Rs. 315 crores. Between 2013-14 to 2015-16 Government of India has released
about Rs. 143 crores as grant in Aid for the development of GSTN and the actual expenditure by
the GSTN is about Rs. 62 crores. Balance of the grant was returned back to the government of
India.

Vision and Mission of GSTN

Vision of GSTN:
1. To become a trusted national Information Utility (NIU) which provides reliable, efficient and
robust IT backbone for smooth functioning of the Goods and Services. Tax regime enbling
economic agents to leverage the entire nation as One market with minimal indirect tax compliance
cost.

Mission of GSTN:
1. Provide common and shared IT infrastructure and services to the Central and State Governments,
Taxpayers and other stakeholders for implantation of the Goods and Service Tax.
2. Provide common Registration, Return and Payment services to the taxpayers.
3. Partner with other agencies for creating an efficient and user-friendly GST Eco-system.
4. Encourage and collaborate with GST Suvidha Providers (GSPs) to roll out GST Applications for
providing simplified services to the stakeholders.
5. Carry out research study best practices and provide Training and Consultancy to the tax authorities
and other stakeholders.

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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

6. Provide efficient Backend Services to the tax departments of the Central and State Governments on
request.
7. Develop Taxpayer Providing Utility (TPU) for Central and State Tax Administration.
8. Assist Tax authorities in improving tax compliance and transparency of Tax Administration system.
9. Deliver any other services of relevance to the Central and State Governments and other stakeholders
on request.

Main objectives of GSTN:

1. To facilitate Registration
2. To facilitate filing and forwarding of returns
3. To help in computation and settlement of IGST
4. Matching tax payment details with the banking network
5. To act as the matching engine for ITC
6. To help in integration of the common GST portal with the tax administration systems of the
Central/State governments and other stakeholders.
7. To provide common PAN-based registration, enable returns filing and payment processing for all
states on shared platform.
8. To facilitate in the implementation and set standards for providing services to the taxpayer through
common GST portal to State governments and other stakeholders.

Powers & Functions of GSTN

1. It facilitates in payment of taxes including penalties and interest
2. It helps to have 100% matching of invoices between supplier and recipient through the tax returns.
3. It is the platform for uploading of invoices and data
4. It helps to track the status of the tax returns, invoices and provides an option for the taxpayers to
accept, modify and reject the invoices.
5. It helps the tax authorities to analyse the taxpayers profile
6. It helps the tax authorities in assessments, investigations, refund appeals
7. It act asa single window for interactions between GST payers of the country and the Department.
This portal also facilities end to end compliances. It is to be noted that no portion of the money
paid by the taxpayers for tax payment is retained by GSTN. It only facilitates as a payment
gateway in tax payment.
8. Contains ITC ledger called Electranic credit ledger, Cash ledger and Liability ledger

Key Features of GSTN

1. Common portal:
Sec 146 of CGST act, 2017 and Sec 20 of IGST act/2017 requires GSTN as common portal. This
portal would be the official government handle with features to facilitate:

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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

i. Registration
ii. Payment of tax
iii. Furnishing of return
iv. Computation of tax liability and settlement of ITC
v. Electronic way bill
vi. Refund application
vii. To carry out such other features as may be prescribed
GSTN could be called as trusted National Information Utility (NIU) providing reliable, efficient
and robust IT backbone for the smooth functioning of GST in India.

2. Well-designed information technology network:

well designed and well-functioning Information Technology (IT) infrastructure facility would be a
pre-condition and pre-requisite for smooth administration of tax payers, processing of returns,
controlling collections, making refunds auditing taxpayers, levying penalties, etc. in the GST regime.
On the IT front, all stake holders have agreed for a common PAN-based taxpayer ID, a common
return, and a common challan for tax payment and therefore a common portal providing three core
services (Registration, returns & Payments) would ease compliance. GSTN is to built to support about
3 billion invoices per month.

3. Build to handle complex transaction:

GST is a destination based tax. The adjustment of IGST (inter state trade) at the government level
(Center & various States) will be extremely complex, considering the sheer volume of transaction all
over india. A rapid settlement mechanism among state & Center will be possible only when there is a
strong IT infrastructure and service backbone which captures, processes and exchanges information.
GSTIN would help in this regard.

4. Secure information:
The government would have strategic control over the GSTIN, as it is necessary to keep the
information of all tax payers confidential and secure. The central government would have control over
the composition of the board, mechanisms of special resolution and shareholders agreement, and
agreements between the GSTIN and other State governments. The share holding pattern of the GSTIN
is such that the government shareholding is the highest than any single private institution shareholding.

5. Share of operating expenses of the GSTIN:

GSTIN is a „Not for profit‟ company. Therefore, the user charges would be paid entirely by the
Central and State governments on behalf of all the users. The state government share of expenses
would be apportioned to individual States, in proportion to the number of taxpayers in the State.

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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

6. Compliance rating mechanism:

GST compliance rating mechanism whereby the credit rating of compliances of taxpayers and
lower compliances if any made by the taxpayers would be displayed in the portal and the lower rating
would indicates lower tax compliances.

Services rendered by GSTN:

1. Registration of new taxpayers, migration of taxpayers, cancellation of registration, amendment of
registration
2. Payment gateways and integration with banking system
3. Return filing and processing
4. Computation of settlements including IGST settlements between Centre and States andto act as clearing
house for IGST
5. Management Information System- system based services including the need-based information and the
business intelligence.
6. GSTN maintains interface between common GST portal and tax administrators.
7. It also provides basic training and instructional facilities to the taxpayers.

GST Suvidha Provider

GSP stands for GST Suvidha Provider. A GSP is considered as an enabler for the taxpayer to
comply with the provisions of the GST law through its web platform. Goods and Service Tax Network
(GSTN) would receive the returns filed by companies through GST Suvidha Provider. The main
stakeholders are Center and States tax Authorities, RBI, the banks, the tax professionals (tax return
preparers, Charted Accountants, tax Advocates, STPs etc.), financial service providers including ERP
providers Tax Accounting Software providers etc. Better compliance from the taxpayers is the key to
success of GST regime. This GSP eco system would provide the tax payer optionsof using third party
applications, which can provide different kinds of interfaces on computers and mobile phone
applications. Few of the GSPs selected by GSTNs are as follows:
a. Deloitte Touche Thomatsu India LLP
b. Earnst & Young LLP
c. Karvy Data Management Services Limited
d. MothersonSumi infotech & Designs Ltd
e. NSDL E-governance Infrastructure Limited
f. Tally Solutions Private Limited
g. TATA consultancy Services Limited

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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

In GST, invoice level matching of purchases and sales is required. The large organizations may
require an automated way to interact with the GST system as it may not be practically possible for
them to upload large number of invoices through a web portal. So, an Eco system is required which
would help such taxpayers in better GST compliances. GSP would help in facilitating the tax payers in
uploading invoices as well as filing of returns and act as a single stop shop for GST related services.
GSPs can customize products that address the needs of different segment of users.

Let us understand GSP through an example below:

ABC Ltd is a private multinational company which is running operations on SAP ERP. All records
with respect to purchases and sales are maintained in it. At the end of each month, reports are
generated from ERP and attached with the tax return and uploaded on government sportal.
Our government is now aiming for single and automated workflow wherein these ERP companies
can build an interface with governments portal and all the GST-related compliance can be done
directly through their software.
GSP need not be only ERP companies but can be start-ups or technology companies having
expertise in building web application.

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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

GSTN believes in creating an eco system of services pproviders i.e., GST Suvidha Provider (GSP)
providing innovative solutions (Portal, Mobile App, Enriched API) either themselves or through its third
party partners for making tax filing more easy and convenient ta tax payers. The third party applications
would connect with GST system via secure GST system APIs. All applications are expected to be
developed by third party service providers who have been a generic name, GST Suvidha Provider or GSP.
The GSPs are envisaged to provide innovative and convenient methods to taxpayers and other stakeholders
in interacting with the GST systems from registration of entity to uploading of invoice details to filing of
returns.
There would be two sets of interactions, one between the app user and the GSP. Second would be
between the GSP and the GST system. It is envisaged that app provider and GSP could be the same entity.
Another version could where data in required format directly goes to GSP-GST server. GSPs act as stop
shop for GST-related services.

Main functions of GSP

i. Registration:
i. New registrations
ii. Amendment to existing registration
iii. Cancellation of registration
iv. Opting in/out from Composition
v. Revocation of registration
vi. Surrender of registration

ii. Returns:
The funcions relating to Returns would consist of the following:
i. Upload invoices (various types B2B, B2C etc.)
ii. Update Uploaded invoices
iii. Accept/Reject/Modify counterparty invoices
iv. Generation of returns based on uploaded invoices and counterparty actions
v. Viewing of liability ledger, ITC ledger and Cash ledger

iii. Payments:
Payment functions would include:
i. Creation of challan
ii. Payment history
iii. View of Challans of all companies of the group, having same PAN to authorized users

iv. Ledger maintenance:

The funcions relating to Ledger maintenance would consist of the following:
i. Utilization of Cash and ITC for tax payment
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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

ii. Checking the balances in Electronic Cash, Credit and Liability ledgers

v. Miscellaneous functions:
The various Miscellaneous functions would include:
i. HSN/SAC code search
ii. Search for Taxpayers
iii. Grievance creation
iv. Notification of alerts and notices.

Guidelines and Architecture to Integrate with GST System:

The guidelines issued in this regard are categorized into “Mandatory” and “Recommended”. The
mandatory guidelines are to be followed without any exception. However, the recommended ones
should be taken as best practices to be adopted

Mandatory guidelines and Responsibilities

1. GSPs need to procure MPLS (multi-protocol lable switching) connectivity from any of the
designated ISPs providing integration connectivity to GST system.
2. GSPs must ensure that traffic originating from their end and destined to GST system is free from
viruses, malwares, intrusions, threats etc. GSTN will reserve the right to block/suspend the
services of GSP if malicious traffic is found which may be impacting the GST system.
3. GSPs must adhere to all government of India IT security standards and Regulatory requirements.
GSPs must comply with IT Act, 2000 and amendments thereof.
4. The ISPs (Internet Service Providers) would submit the list of GSPs that they connect to the GST
system. ISPs should also be prepared to sign necessary arrangements for compliance needs as
applicable at various data centers.
5. Each on-boarded ISP shall bring and deploy their own infrastructure in GSTN data centers in order
to provide connectivity services to GSPs.
6. The access to GST will be controlled through GSTN firewalls. The integration boundary from
GSTN side will be the pair of aggregation switches or GST-GSP switches on which the cross-
connect from ISPs device will be terminated.
7. ISP‟s must provide ISP routers (CPE routers) in HA mode both DC1 (Delhi) and DC2 (Bengaluru)
locations of GSTN.
8. ISP‟s shall arrange for the required rack space outside the GSTN cage area.
9. ISP routers has to hosted in the ISP‟s cage area or ISP‟s rack near to the GSTN DC1/DC2 cage
area, in a highly secured manner.
10. GSPs has to route the GSTN-related URLs IPs inside the respective ISPs/GSPs network and the IP
details will be provided at the time of integration.

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M.Com, M.B.A, M.A in economics
 IV Semester, M.Com Goods and Services Tax-II

GST Eco System:

A common GST system will provide linkage to all State/UT Commercial Tax departments, Central
Tax authorities, Taxpayers, Banks and other stakeholders. The eco-system consists of all stakeholders
starting from taxpayer to tax professional to tax officials to GST portal to Banks to accounting
authorities. The diagram given below depicts the whole GST eco-system.

Syed Babu H B
M.Com., M.B.A., M.A in Economics
P.G Studies in Commerce
Sri Siddhartha First Grade College - Tumkur

Syed Babu H.B Page 9

M.Com, M.B.A, M.A in economics