Goods and Services Tax Network (GSTN)

What is GSTN

The Goods and Services Tax Network (GSTN) is a unique and intricate IT enterprise that establishes a channel of communication and interaction between taxpayers, the central and various state governments, and other stakeholders. This single consolidated IT platform has given shape to the main objective of Goods and Services Tax (GST), i.e., One Nation, One Tax, One Market.

For compliance and administrative purposes, the GSTN has brought together millions of taxpayers who were earlier registered on different tax platforms under a consolidated umbrella. Consequently, any business entity registered on GSTN shall be allotted a 15-digit Goods and Services Tax Identification Number (GSTIN) to replace the old Tax Identification Number (TIN) allotted by respective states under Value-added Tax (VAT) registration. 

Structure of GSTN

The uniqueness of the Goods and Services Tax Network lies in its endeavor to act as a uniform interface for the taxpayers and governments along with a shared, common technology infrastructure between the central and the state governments.

• Structurally, 51% of GSTN’s stake is held by private entities, and the government owns the remaining 49%.

• GSTN’s authorized share capital is Rs. 10 Crores, 49% of which is equally distributed between the Central and various state governments, with the remaining 51% distributed between private banks.

• Further, a non-recurring grant of Rs. 315 Crores was sanctioned for its sophisticated backend development by Infosys Technologies Ltd.

Features of GSTN

• Manages Gargantuan Operations: The GSTN can process a heavy volume of complex transactions, such as adjustment of inter-state GST (IGST). This is made possible through its robust and secure IT infrastructure that facilitates a swift exchange of data between the taxpayers and the GSTN. The primary purpose of GSTN is to assist taxpayers in registering, paying taxes, and claiming GST returns in order to, among other things, produce business analytics. Additionally, the network is in charge of computing and paying the Integrated GST (IGST) and the Input Tax Credit (ITC). Thus, the GST network concentrates on offering comprehensive answers to complex and exhaustive taxing problems.

• Reliable National Information Utility (NIU): The GSTN is tagged as the most reliable NIU, making it in charge of providing a secure and strong IT infrastructure that enables a verifiable information exchange. The GST Network serves as a reliable national information service (NIU). This basically means that the network is responsible for delivering dependable, strong, seamless information passing, and IT infrastructure.

• Ownership: The ownership of GSTN is distributed between the government (49%) and private entities (51%) that comprise banks and financial institutions. However, a major share of the GSTN is owned by the Central government compared to any individual stakeholder.

• Payment Mode: The GST Network allows payment by taxpayers through both online and offline modes:

1. Online Mode: Internet banking facilities can be availed for online payment. The Reserve Bank of India (RBI) has authorized specific banks, known as the Agency banks, to collect payments made in favor of GST. The taxpayer shall make a payment by logging onto the selected agency bank’s web portal and downloading a challan of the GST transaction done. Once the choice is made, the taxpayer must log in to the online banking platform of the chosen bank to proceed with the transaction and download the GST payment challan.

2. Offline Mode: GST payment online can be availed through the ‘over the counter option at any select agency bank. The agency bank shall further communicate the payment details to the RBI and the GSTN for its updation. To pay the GST, you can go directly to the relevant bank. The bank will also update all pertinent information by notifying the RBI and the GST portal.

• Information Security: A major portion of the responsibility to preserve the security and confidentiality of GSTN data lies with the central government. It shall manage the board’s composition, shareholder’s agreement, resolution mechanisms, and any agreements forged between the state governments and the network. 

• Financial Maintenance: The expenses incurred towards utility, infrastructure maintenance, and any other operations of the GSTN shall be paid in equal share by the central and state governments. Each state’s share of expenses shall be calculated in proportion to the number of taxpayers in the state.

Functions of GST Network

The Goods and Services Network, designed to act as a communication channel between the taxpayers and the governments, processes a mammoth volume of invoices and taxpayer returns every month. The GST Network serves as essentially the front end of the IT ecosystem for taxpayers. More than 2 billion invoices are processed by GSTN each month, in addition to processing returns for more than 65 Lakh taxpayers and expanding. The GST network is in charge of a number of significant tasks, including the following:

• Analysis of Taxpayer’s Profile: When a taxpayer wants to register on GSTN, all his/her details are thoroughly verified and passed on to the central and the respective state government for approval.

• Registration: Once the Taxpayer’s profile is verified and approved, he/she is allotted a GSTIN and notifies the respective tax authorities about it. As was already established, the GST network serves as a bridge between the government and the taxpayer seeking to register for GST under the new tax regulations. Once the registration has been confirmed, GSTN issues the GST Identification Number to the appropriate taxpayer and uploads the information with the appropriate tax authorities.

• Tallying Invoice: This is a key function performed by the GSTN to cull out any discrepancies between the purchase invoices and sales invoices and resolve them so that the Taxpayer can avail of the Input Tax Credit (ITC) benefits. In order for taxpayers to benefit from Input Tax Credit, the GST network essentially compares the purchase and sale invoice totals to look for any discrepancies and correct them.

• Filing Returns: GSTN has a unified, hassle-free return filing method for any GST, be it State GST (SGST), IGST, or Central GST (CGST), without burdening the Taxpayer. Once filed, the GSTN processes and forwards the returns to the central government and state governments. In addition to the above basic duties, the GSTN is involved in a few more tasks such as:

How to Apply for GSTIN

You can follow the steps below to apply for GSTIN via the GST portal:

• Step 1: Navigate to the online portal of GST.

• Step 2: Click on the ‘New Registration’ button.

• Step 3: Fill in all the essential details such as name, phone number, and email address.

• Step 4: Verify your mobile number and email by entering the OTP.

• Step 5: Once done, you will receive an Application Reference Number (ARN)

• Step 6: Using the ARN, log in to your application form and enter additional details.

• Step 7: Upload the essential documents.

• Step 8: Submit your application using Aadhaar OTP or DSC.

However, you can also apply for GSTIN offline from GST Seva Kendra if you are not much comfortable with online procedures.

Calculation and Adjustment of IGST

Collating Agency banks with tax payment data

Maintenance of Input Tax Credit Calculator

Generating and sending MIS (Management Information and System) reports to the governments

The advent of the GST Network has undoubtedly simplified the complex indirect taxation system by consolidating and replacing all indirect taxes under a single roof. GSTN’s superior IT interface has also eased the burden on business entities by providing a quick, one-stop solution to upload their invoices, file returns, and avail tax benefits.

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Taxpayer Profile Analysis

When a taxpayer applies to register for GST, all of their specific information is checked before being submitted for approval to the tax authorities of the federal and state governments. In addition to managing the basic tax filings and tax returns, GSTN also has the following additional duties related to managing taxation:

• Calculation, followed by settlement of integrated GST (or IGST)

• Integration of banking network to tax payment details

• Management of Input Tax Credit computation engine 

• Submission of the MIS reports to the government 

Latest GSTN News

January 11, 2023

The GSTN has now enabled the latest functionality LUT or Letter of Undertaking for the financial year 2023-2024 

January 13, 2023

Authorities have now implemented the new Automated Drop Proceedings functionality on the GST official Portal.

The department has informed the GST stakeholders in detail about the new functionalities. The functionalities for December 2022 address issues like registration, returns, and refund claims.

Latest GSTN News