India: Goods And Services Tax Network

Last Updated: 7 January 2016
Article by SKP  

As India moves closer to adopting the Goods and Services Tax (GST), it is imperative to build a strong IT network which can integrate India's indirect tax data from across the country and process the data on a real-time basis.

The proposed solution for such a task is the GST Network (GSTN). The GSTN, as proposed, will act as an IT backbone for GST.

The Empowered Committee of State Finance Ministers first set up an Empowered Group on IT infrastructure for GST headed by Mr Nandan Nilekani on 26 July 2010. This was followed up with the incorporation of a 'Not for Profit' section 25 non-government company on 28 March 2013. The GSTN company has primarily been set up to monitor IT infrastructure and services to the central and state governments, taxpayers and other stakeholders, for the implementation GST in India.

The government awarded the GSTN development contract to Infosys for INR 13.8 billion. It will be a five-year contract post the GST implementation. Infosys has previously worked with the government on the Ministry of Corporate Affairs' digitisation process. Being a top tier IT private entity, they can easily leverage their vast pool of experience with the government and other tax authorities to meet the required deadline of 1 April 2016.

Information flow under GSTN

The GSTN could be a key factor in ascertaining whether or not the GST regime will effectively lead to transparency and ease of doing business in India, compared to the current indirect tax regime.

Although the final GSTN model has not been made public, various committees have presented their models to demonstrate how GSTN should ideally function. One such report submitted under the guardianship of Mr Nandan Nilekani in 2009 represented an ideal GST IT system. The report proposed tax autonomy for states and also proposed to prevent adverse tax leakages from the system.

A figurative model of the information flow proposed in the report is given hereunder:

*As per the recommendation of the Empowered Group on IT infrastructure on GST

The proposed GST IT system identifies four major stakeholders along with the GST portal

  • Taxpayer
  • Banks (RBI and other Banks)
  • States and
  • Central Agency (represented by CBEC)

Information flow as per the proposed report

  1. The taxpayer files the GST return with the GST portal;
  2. The taxpayer pays GST to the bank and uploads the challan details to the GST portal (there is no actual movement of funds taking place within the GST portal);
  3. The GST portal keeps a copy of the GST return for analysis and then sends the GST return details, in near real-time, to the respective state and the Central Board of Excise and Customs (CBEC) for further legal scrutiny;
  4. The state and CBEC then provide an intelligence report to the common GST portal which crosschecks the details of the GST return filed by the taxpayer and then confirms them;
  5. The common GST portal then reconciles the assessed GST liability with the challans;
  6. A match of assessed GST liability with challans paid shall be a closure of assessment and mismatch of the same will lead to intimating department officials about the default.

Simultaneously, the fund flows could be mediated with the help of the Reserve Bank of India (RBI) and structured in a way that the State GST (SGST) funds of the states are directly transferred from the taxpayer to the state treasuries and Central GST (CGST) funds directly move to the Centre. The RBI could help compute inter-state settlements. IGST could then be further settled between the states and Centre by RBI.

Goals of the GSTN

As GSTN tends to bind indirect tax data across the country, it shall also achieve the following goals in order to streamline business processes in India:

  • Simplification: Simplify the process for taxpayers by creating a uniform process of filing returns.
  • Cost reduction: Lower compliance cost and collection cost.
  • Reduction in tax evasion: Minimise the risk of tax evasion and reduction in leakages due to the smooth flow of information between the Centre and states.
  • Automation: Digitise and automate processes through e-registration, e-payment and e-return.
  • Credit availability: Enable a smooth flow of credit by the government on the basis of returns filed and revenues reconciled against challan data from the bank.
  • Uniformity: Create uniformity in policy administration.

Road Ahead

The GSTN is an important thread that will bind the indirect tax IT systems of all states with the Centre. Unfortunately, barring a few, many states are yet to automate their indirect tax procedures. Ideally, the states have to start upgrading their IT systems as early as possible to reach the level of sophistication in processes and procedures required for GSTN in the near future.

Internationally, Malaysia has been the country to have most recently adopted GST. Although the Malaysian government had given a significant time frame for industries to implement GST, most had not updated their software for complete GST compliance. There were various apprehensions at the operational level regarding GST implementation which aggravated post-implementation problems.

Given the required technology upgrade, the industry must take appropriate measures to train themselves and their vendors to make sure there is no leakage of credits.

Thus, the industry has to get acquainted with the IT systems in order to ensure a smooth transition from current indirect tax procedures to procedures under GSTN.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions