Exclusive: GST Network May Borrow From Banks As Dues From Governments Mount

The central government and states together owe GST Network Rs 411 crore in user charges for 2020-21, and some pending payments for financial years 2018-19 and 2019-20, a government official said on the condition of anonymity as details aren’t public.

Payments to GSTN—for providing infrastructure to taxpayers—are equally split between central government and states. On Oct. 1 every year, GSTN raises bills for advance payment of user charges for meeting its operating expenses. These are collected in two instalments—June and October. But central and state governments are facing revenue crunch due to the pandemic, and states had sought extension of time to pay the charges, without interest.

The GST Council has extended the time for payment of two instalments till March 31, 2021. The interest of 12% normally imposed for late payments has also been waived, the official quoted earlier said.

That’s expected to impact operating expenses of the firm responsible to provide backend of India’s biggest indirect tax reform.

According to the GSTN revenue model approved by the GST Council, the platform can avail credit from a commercial bank to meet the shortfall in advance user receipts. In cases when the amount received as user charges gets exhausted in a year, GSTN can avail working capital from a bank to meet its operating expenses, and states and centre will foot the bill to repay the loan.

According to the official quoted earlier:

• Punjab and Telangana haven’t paid user charges for 2018-19 worth Rs 14.43 crore.
• Some northeastern states are also yet to pay charges for FY19.
• Telangana and Andhra Pradesh are yet to pay for 2019-20.
• The central government owes Rs 132 crore to GSTN due Oct. 1.

Emailed queries to GSTN didn’t elicit a response. The Information and Public Relations Department of Andhra Pradesh, Tamil Nadu, Chhattisgarh, Arunachal Pradesh, Punjab; public relations officer of Rajasthan; and Sikkim’s Secretary (revenue) are yet to respond to BloombergQuint’s emailed queries. A call made to the office of Director of Telangana Information and Public Relations Department on the number listed on its website, too, remained unanswered.

Conversion Into PSU Pending

The conversion of GSTN into a fully government-owned entity is pending for over two years after the GST Council gave its nod. That’s because seven states are yet to pay private companies for share transfer, the official cited earlier said.

In 2018, the Union Cabinet had approved increasing government stake in GSTN by 51% after GST Council’s decision. Acquisition of the entire 51% equity held by private companies in GSTN was to be equally split between the central and state governments.

The seven states that are yet to purchase equity in GSTN are Tamil Nadu, Rajasthan, Sikkim, Andhra Pradesh, Chhattisgarh, Arunachal Pradesh and Telangana. They have to buy out HDFC Ltd., HDFC Bank, Ltd. and ICICI Bank Ltd., the official said.