GSTN and Frontend Business Process on GST Portal

Q 1. What is GSTN?

Ans. Goods and Services Tax Network (GSTN) is a not-for-
profit, non-government company promoted jointly by the
Central and State Governments, which will provide shared IT
infrastructure and services to both central and
state governments including tax payers and other
stakeholders. The Frontend services of Registration,
Returns, Payments, etc. to all taxpayers will be provided by
GSTN. It will be the interface between the government and
the taxpayers.

Q 2. What was need to create GSTN?

Ans. The GST System Project is a unique and complex IT
initiative. It is unique as it seeks, for the first time to
establish a uniform interface for the tax payer and a
common and shared IT infrastructure between the Centre
and States. Currently, the Centre and State indirect tax
administrations work under different laws, regulations,
procedures and formats and consequently the IT systems
work as independent sites. Integrating them for GST
implementation would be complex since it would involve
integrating the entire indirect tax ecosystem so as to bring
all the tax administrations (Centre, State and Union
Territories) to the same level of IT maturity with uniform
formats and interfaces for taxpayers and other external
stakeholders. Besides, GST being a destination based tax,
the inter- state trade of goods and services (IGST) would
need a robust settlement mechanism amongst the States
and the Centre. This is possible only when there is a strong
IT Infrastructure and Service back bone which enables
capture, processing and exchange of information amongst
the stakeholders (including taxpayers, States and Central
Government, Bank and RBI). To achieve these objectives
GSTN was created.

Q 3. What is the genesis of GSTN?

Requirements of strong IT Infrastructure was discussed
in the 4th meeting of 2010 of the Empowered
Committee of State Finance Ministers held on
21/7/2010. In the said meeting the EC approved
creation of an ‘Empowered Group on IT Infrastructure
for GST’ (referred to as EG) under the chairmanship of
Dr. Nandan Nilekani with Additional Secretary (Rev),
Member (B&C) CBEC, DG (Systems), CBEC, FA Ministry of
Finance, Member Secretary EC and five state
commissioners of Trade Taxes (Maharashtra, Assam,
Karnataka, West Bengal and Gujarat) as members. 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.

In March 2010, TAGUP constituted by the Ministry of
Finance had recommended that National Information
Utilities should be set up as private companies with a public
purpose for implementation of large and complex
Government IT projects including GST. Mandate of TAGUP
was to examine the technological and systemic issues
relating to the various IT projects such as GST, TIN, NPS,
etc.

The EG had 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.

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.

EG also brought out the need to have technology
specification to run this company so that there is 100
percent matching of returns. The business knowledge
resides with the officials of Government of India and States.
However, professionals with sophisticated technology
knowledge will be required to run this company
independently, similar to NSDL which is working
professionally and independently. EG also recommended a
non-government company as that will have operational
freedom.

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
proposal of the EG on IT infrastructure for GST regarding
GSTN and formation of a not-for-profit section 25 company
with the strategic control of the Government were approved
by the Empowered Committee of State Finance Ministers
(EC) in its meeting held on14.10.11.

The note of Department of Revenue for setting up a Special
Purpose Vehicle to be called Goods and Services Tax
Network (GSTN-SPV) on the lines mentioned above was
considered by the Union Cabinet on 12th April 2012 and
approved. The Union cabinet also approved the following:

i. Suitable and willing non-government
institutions will be identified and firmed up by
the Ministry of Finance to invest in GSTN-SPV
prior to its incorporation.

ii. 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.

iii. 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.

iv. Relaxation in relevant rules to enable deputation
of Government officers to the GSTN SPV for
exercise of strategic control and for bringing in
necessary domain expertise.

v. 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.

vi. GSTN SPV to 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.

vii. A one- time non- recurring Grant- in aid of Rs.
315 crores from the Central Government towards
functioning of the SPV for a three- year period
after incorporation.

Q 4. What is the equity structure and Revenue Model of GSTN?

Ans. (a) Equity Structure: – In compliance of the Cabinet
decision, GST Network was registered as a not-for-profit,
non-Government, private limited company under section 8
of the Companies Act, 1956 with the following equity
structure:

Central Govt 24.5%

State Govts 24.5%

HDFC 10%

HDFC Bank 10%

ICICI Bank 10%

NSE Strategic Investment Co 10%

LIC Housing Finance Ltd 11%

The GSTN in its current form was created after taking
approval of the Empowered Committee of State Finance
Ministers and Union Government after due deliberations
over a long period of time.

(b) Revenue Model: An amount of 315 Cr. was approved
by the Govt. of India as Grants-in-Aid for initial setting up
of the GSTN-SPV in 2013. During the period 31.03.2013 to
31.03.2016, an amount of Rs 143.96 Crores was released
as Grant-In-Aid to GSTN out of Rs 315 Crores approved by
Govt of India. Out of the grant-in-aid received, only Rs.
62.11 Cr was spent during this period in setting of the
Company and making it functional. The balance grant was
returned to Govt. of India. During FY 2016-17, GSTN has
got loan sanctioned from a commercial bank to meet
expenditure over setting up the IT Platform to provide
services to the Center and States through GST portal and
developing the backend for 27 States and Union
Territories. The Revenue model for GSTN has been
approved by the Empowered Committee of State
Finance Ministers under which user charges will be paid
by the Centre and States/UTs equally on behalf of
taxpayers and other stakeholders for availing services
from the GST Portal. The user charges will be shared
equally by the Centre and the States. The user charges for
States will be apportioned amongst them based on
number of registered taxpayers.

Q 5. What services will be rendered by GSTN?

Ans. GSTN will render the following services through the
Common GST Portal:

(a) Registration (including existing taxpayer
migration, a process which began on 8th Nov
2016);

(b) Payment management including payment
Gateways and integration with banking systems;

(c) Return filing and processing;

(d) Taxpayer management, including account
management, notifications, information, and
status tracking;

(e) Tax authority account and ledger Management;

(f) Computation of settlement (including IGST
Settlement) between the Centre and
States ; Clearing house for IGST;

(g) Processing and reconciliation of GST on import
and integration with EDI systems of Customs;

(h) MIS including need based information and
business intelligence;

(i) Maintenance of interfaces between the Common
GST Portal and tax administration systems;

(j) Provide training to stakeholders;

(k) Provide Analytics and Business Intelligence to
tax authorities; and

(l) Carry out research and study best practices.

Q 6. What is the interface system between GSTN and the States/CBEC?

Ans. In GST regime, while taxpayer facing core services
of applying for registration, uploading of invoices, filing of
return, making tax payments shall be hosted by GST System,
all the statutory functions (such as approval of registration,
assessment of return, conducting investigation and audit
etc.) shall be conducted by the tax authorities of States and
Central governments.
Thus, the frontend (GST Portal services) shall be provided
by GSTN and the backend modules shall be developed by
states and Central Government themselves. However, 27
states (termed as Model-2 states) have asked GSTN to
develop their backend modules also. The CBEC and rest of
the 9 states (Model 1) have decided to develop and host the
back-end modules themselves. For Model 1 states/ CBEC
full data (registration, return, payment etc.) submitted by
taxpayers will be shared with them for information and
analysis as deemed fit by them.

Q 7. What will be the role of GSTN in registration?

Ans. The application for Registration will be made Online
on GST Portal.

Some of the key data like PAN, Business Constitution,
Aadhaar, CIN/DIN etc. (as applicable) will be validated by
the GST Portal online with the respective agency i.e.
CBDT, U I D , MCA etc., thereby ensuring minimum need for
submission of documentation.

The application data along with supporting
scanned documents shall be sent by GSTN to
states/ Centre, which in turn shall send the query, if any,
or approval or rejection intimation and digitally signed
registration to GSTN for eventual download by the
taxpayer.

Q 8. What is the role of Infosys in GSTN?

Ans. GSTN has engaged M/S Infosys as a single Managed
Service Provider (MSP) for the design, development and
deployment of GST system, including all application
software, tools and Infrastructure and for operating &
maintaining the system for a period of 5 years from the
Go-Live date.

Q 9. What are the basic features of GST common portal?

Ans. The GST portal (www.gst.gov.in ) is accessible
over Internet (by Taxpayers and their CAs/Tax Advocates
etc.) and Intranet by Tax Officials etc. The portal is going
to be one single common portal for all GST related services
e.g.–

i. Tax payer registration (New, surrender,
cancelation, amendment etc.);

ii. Invoice upload, auto-drafting of Purchase
register of buyer, GST Returns filing on stipulated
dates for each type of return (GSTR [1,2,3,5, 9.etc];

iii. Tax payment by creation of Challan
and integration with agency Banks;

iv. ITC and Cash Ledger and Liability Register;

v. MIS reporting for tax payers, tax officials and
other stakeholders;

vi. BI/Analytics for Tax officials.

Q 10. What is the concept of GST Eco-system?

Ans. 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.

Q 11. What is GSP (GST Suvidha Provider)?

Ans. GST System will provide a GST portal for taxpayers to
access the GST System and do all the GST compliance
activities. But there will be wide variety of tax payers
(SME, Large Enterprise, Micro Enterprise etc.) which may
require different kind of facilities like converting their
purchase/sales register data in GST compliant format,
Integration of their Accounting Packages/ERP with GST
System etc., various kind of dashboards to view
Matched/Mismatched ITC claims, Tax liability, Filing
status etc. As invoice level filing is required, so large
organizations may require an automated way to interact
with GST system as it may be practically impossible for
them to upload large number of invoices through a web
portal. So an eco- system is required, which can help such
taxpayers in GST compliance.

As Tax payer convenience will be the key to success of GST
regime, this eco-system will also provide Tax payer
options of using third party applications, which can
provide different kind of interfaces on desktop/mobile for
them to be GST compliant.

All above reasons require an eco-system of third party
service providers, who have access to GST System and
capability to develop such applications. These service
providers have been given a generic name, GST Suvidha
Providers or GSP.

Q 12. What will be the role of GST Suvidha Providers (GSP)?

Ans. GSP will be developing applications having features
like return filing, reconciliation of purchase register data
with auto populated data for
acceptance/rejection/Modification, dashboards for
taxpayers for quick monitoring of GST compliance
activities. They may also provide role based access to
divide various GST related activities like uploading
invoice, filing returns etc., among different set of users
inside a company (medium or large companies will need
it), Applications for Tax Professional to manage their
client’s GST compliance activities, Integration of existing
accounting packages/ERP with GST System, etc.

Q 13. What are the benefits to taxpayers in using the GSPs?

Ans. At the outset it is clarified that all required functions
under GST can be performed by a taxpayer at the GST
portal. GSP is an additional channel being made available
for performing some of the functions and use of their
services is optional. Some of the specific solution(s) which
could be offered by the GSPs to meet specific requirements of
Taxpayers for GST compliance are given below:

Conversion of their current invoice format
generated by their existing accounting software,
which could be in csv, pdf, excel, word format, into
GST compliant format.

Reconciliation of auto populated data from GST
portal with their purchase register data, where
purchase register data can be on excel, csv or in
any proprietary database and uploaded data from
GST format could be in json/csv.

Organization having various branches will need
a way to upload branch wise invoices, as GST
System will only provide one user-id/password
for GST system access. An application having
role based access and different view for different
branches will be needed.

A company registered in multiple States may
require unified view of all branches in one
screen,

GST professionals will need some specific
applications to manage and undertake GST
compliance activities for their client Tax payers
from one dashboard, etc.

Above are just a few illustrations. There will be many more
requirements of different sets of Tax payers. These
requirements of taxpayers can be met by GSPs.

Q 14. What are the functions which a taxpayer will perform at the GST Common Portal being developed and maintained by GSTN for the taxpayers?

Ans. GST Common Portal is envisaged as one -stop-
shop for all requirements under GST for the
taxpayers. Illustrative list of functions that can be
performed by taxpayers through GST Portal managed by
GSTN are:

Application for registration as well as amendment
in registration, cancellation of registration and
profile management;
Payment of taxes, including penalties, fines,
interest, etc. (in terms of creation of Challan as
payment will take place at bank’s portal or inside a
bank premises);
Change of status of a taxpayer from normal to
Compounding and vice-versa;
Uploading of Invoice data & filing of various
statutory returns/Annual statements;
Track status of return/tax ledger/cash ledger etc.
using unique Application Reference Number (ARN)
generated on GST Portal.
File application for refund etc.
Status review of return/tax ledger/cash ledger

Q 15. What will be the role of tax officers from State and Central Govt in respect of the GST system being developed by GSTN?

Ans. The officers will use information/ application
submitted by taxpayer on GST Portal for following
statutory functions:

Approval/rejection for enrollment/registration
of taxpayers;
Tax administration (Assessment / Audit
/Refund / Appeal/ Investigation etc.);
Business Analytics, MIS and other statutory
functions.

Q 16. Will GSTN generate a unique identification for each invoice line in GSTN system?

Ans. No, GSTN will not generate any new identification.
The combination of Supplier’s GSTIN, Invoice no and
Financial year will make each Invoice unique.

Q 17. Can invoice data be uploaded on day to day basis?

Ans. Yes, GST Portal will have functionality for taxpayers
to upload invoice data on any time basis. Early upload of
invoices by supplier taxpayer will help receiver taxpayer
in early reconciliation of data in Invoices as well as help
supplier taxpayer in avoiding last minute rush of
uploading returns on the last day.

Q 18. Will GSTN provide tools for uploading invoice data on GST portal?

Ans. Yes, GSTN will provide spreadsheet like tools (such
as Microsoft Excel), free of cost, to taxpayers to enable
them to compile invoice data in the same and generate
files which can then be uploaded on GST portal. This
will be an offline tool which can be used to
input/capture invoice data without being online and
then generate final files in compatible format for
uploading to GST portal.

Q 19. Will GSTN be providing mobile based Apps to view ledgers and other accounts?

Ans. The GST portal is being designed in such a way that
it can be seen on any smart phone. Thus ledgers like cash
ledger, liability ledger, ITC ledger etc. can be seen on a
mobile phone using compatible browsers.

Q 20. Will GSTN provide separate user ID and password for GST Practitioner to enable them to work on behalf of their customers (Taxpayers) without requiring user ID and password of taxpayers, as happens today?

Ans. Yes, GSTN will be providing separate user ID and
Password to GST Practitioner to enable them to work on
behalf of their clients without asking for their user ID and
passwords. They will be able to do all the work on behalf
of taxpayers as allowed under GST Law.

Q 21. Will taxpayer be able to change the G S T Practitioner once chosen in above mentioned facility?

Ans. Yes, a taxpayer may choose a different GST
Practitioner by simply unselecting the previous one and then
choosing a new GST Practitioner on the GST portal.

Q 22. Will existing taxpayers under Central Excise or Service Tax or State VAT have to apply for fresh registration under GST?

Ans. No, the existing taxpayers under taxes which are to
be subsumed under GST and whose PAN have been
validated from CBDT database will not be required to
apply afresh. They will be issued provisional GSTIN by GST
portal, which will be valid for six months. Such taxpayers
will be required to provide relevant data as per GST
enrollment form online on GST Portal. On completion of
data filing the status of taxpayer will change to Migrated.
On appointed day the status of taxpayer will change to
Active and he will be able to comply with requirements of
GST regime for payment of taxes, filing of returns etc., on
GST Portal.

GSTN has issued Provisional IDs and passwords to all such taxpayers and the
same has been shared with tax authorities for conveying the same to the
taxpayers. Enrolment of existing taxpayers for GST started at GST portal on
8th November 2016 and by end of March 2017 a large number of them have
activated the Provisional ID and many have completed the migration process.
More details are available at https://www.gst.gov.in/help

Q 23. What material will be provided by GSTN, on various aspects of working on GST portal, for the benefit of taxpayers?

Ans. GSTN is preparing Computer Based Training
materials (CBT’s) which have videos embedded into them
for each process to be performed on the GST portal. These
will be put on the GST portal as well as on the website of all
tax authorities. Apart from CBT’s, Various User Manuals,
FAQ’s etc., will also be placed on GST Portal for education of
the taxpayers. Apart from it, a helpdesk has been set up for
the taxpayers for logging of their tickets via mail
(helpdesk@gst.gov.in) or phone (0124-4688999). CBT, FAQ
and User Manual for enrolment process are available at
https://www.gst.gov.in/help.

Q 24. Will the return and registration data furnished by the taxpayers on the GST Common Portal will remain Confidential?

Ans. Yes, all steps are being taken by GSTN to ensure the
confidentiality of personal and business information
furnished by the taxpayers on GST Common Portal. This
will be done by ensuring Role Based Access Control (RBAC)
and encryption of critical data of taxpayers both during
transit and in storage. Only the authorized tax authorities
will be able to see and read the data.

Q 25. What are the security measures being taken by GSTN to ensure security of the GST system?

Ans. GST Systems project has incorporated state of art
security framework for data and service security. Besides
high end firewalls, intrusion detection, data encryption
at rest as well as in motion, complete audit trail, tamper
proofing using consistent hashing algorithms, OS and host
hardening etc., GSTN is also establishing a primary and
secondary Security Operations Command & Control center,
which will proactively monitor and protect malicious
attack in real time. GSTN is also ensuring secure coding
practices through continuous scanning of source code &
libraries being used in GST system to protect against
commonly known and unknown threats.