Is the Finance Ministry covertly attempting to grant Rs.1600 crores to GSTN?

Why is a minority shareholder shouldering the burden of expenses while the others just watch?

Why is a minority shareholder shouldering the burden of expenses while the others just watch?
Why is a minority shareholder shouldering the burden of expenses while the others just watch?
The Finance Ministry is soon going to give Rs.1600 crores ($239 million) in a covert way to the Goods Services and Taxes Network Company (GSTN), the private company dubiously constituted by the United Progressive Alliance (UPA) government for tax administration and collection of GST. Team PGurus has learnt that in order to avoid Cabinet scrutiny, this huge fund of Rs.1600 crores ($239 million) is being given in five installments of Rs.320 crores ($48 million) at specific intervals.

It may be noted that in the projects of Income Tax or Customs / Excise & Service Tax there is no concept of Actual User fees.

The excuse given by the Finance Ministry’s top officials including Finance Minister Arun Jaitley is that this money is given to GSTN as User Fee. The User Fee is supposed to be paid by the tax payers of GST, which are the producing companies for enrolling with GSTN. But this was quietly changed and Government of India has decided to own up the User Fee supposed to be paid as enrolment fee by the private tax payers, who come under GST (Goods and Services Tax).

User Fees – is the fee every tax payer pays to the GSTN for the facility being provided by the GSTN to use their network for payment of tax. Initially it was decided that this fee would be paid by the actual user. However, the Finance Minister later decided that this fee would be paid by the Government.

It may be noted that in the projects of Income Tax or Customs / Excise & Service Tax there is no concept of Actual User fees.

Here are some questions:

  1. Why is the Government, which owns only 49 percent own up all expenses of GSTN? 51 percent of shares of GSTN are with ICICI Bank, HDFC, HDFC Bank, LIC Housing Finance and NSE’s subsidiary company and these companies have spent only a meagre share thus far. Government of India which is having only 24.5 percent has already spent more than Rs.2000 crores on this dubious company called GSTN. State Governments totally have 24.9 percent shares in this company floated during P Chidambaram’s tenure in Finance Ministry in 2013

    Government of India has stood as a Guarantor for a 300 crore ($45 million) loan to be taken by the GSTN. Despite  the fact that they are regularly being funded by the GoI, the GSTN chairman has vehemently opposed the audit of the company by the Comptroller and Auditor General of India (CAG). The Apex Auditor has taken very serious objection to this decision of GSTN to not submit themselves to audit by the CAG and have lodged a complaint with the Finance Ministry.

    It is an intriguing fact that the GoI is continuously funding / standing as a Guarantor to the GSTN while the majority share holders (51%) have been silent spectators.

  2. Why is the NDA Government, supporting this dubious company floated by UPA Government? Is it because many international consortiums, which owns ICICI Bank and HDFC and LIC Housing Finance have their moles in every government department a quid-pro-quo is in place for their silence?


Note:
1. The conversion rate used in this article is 1 USD = 67.06 Rupees.
2. Text in Blue points to additional data on the topic.

Team PGurus

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8 COMMENTS

    • In the post itself, there is a link that will lead you to the contact numbers of the individuals quoted in the Ministry of Finance.

  1. This Arun Jaitely is the most dangerous person in the current cabinet. Hope PM realises sooner rather than later. He is taking a very big risk for 2019.

  2. What a Traitorley we have as FM!!!!!! Working against India’s interest.
    Coupled with the Karti case . What’s Doval doing? His budget has increased to 333 crores! Quid pro quo!

  3. The GSTN agreement should be scrapped immediately.
    And all control should be taken by GOI.
    The GSTN is just like the Antrim Devas deal for which Indian Govt had to pay dearly.
    However in this case the major shares are held by Indians who can be requested to give away their share in view of National Interest.

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