Infy bags the GST deal

Infosys has beaten big names in the IT sector to get the high-profile contract to develop and operate the technology platform for the proposed goods and services tax (GST).

The Bengaluru-based company has bagged the contract with a bid of Rs 1,380 crore.

The GST IT system will provide a standard interface for the taxpayer including registration, filing of returns and payment of tax and a common and shared IT infrastructure between the centre, states and other bodies such as the Reserve Bank of India (RBI).

It is true that Infosys has bagged the contract and will develop the system and operate it for five years, informed Navin Kumar, chairman of the Goods and Services Tax Network (GSTN), which was incorporated in March 2013 as a not-for-profit, non-government, private limited company.

However, Infosys, India's second-largest software exporter has declined to comment over the development.

Bigger rival Tata Consultancy Services, Wipro and Tech Mahindra were also said to be in the race for the prestigious contract, which entails designing, developing and maintaining the GST system.

The central government holds 24.5% equity in GSTN and all states, including Delhi and Puducherry, and the Empowered Committee of state finance ministers together hold another 24.5%. The remaining 51% equity is with non-government financial institutions.

GST, hailed as a comprehensive reform of indirect taxes that could lift country's GDP by 1-2%, is stuck with the main opposition Congress stalling the Constitutional amendment bill in the upper house of Parliament, where the ruling NDA doesn't enjoy a majority.

The proposed GST would replace a plethora of indirect taxes at the central and state levels with a single levy and create a unified national market in the country from April 1, 2016, a deadline that may be missed if the Congress continues to oppose the bill.

Tax experts are of the opinion that the award of this contract displays the government's intent to push the new tax.

"GST can only be successful if the technology backbone is strong. Recent experience in Malaysia, which implemented GST from April this year, further amplifies it," said Pratik Jain, a partner at KPMG in India.

He said the award of the contract in the face of the delayed passage of the bill shows the government is serious about implementing the new tax as early as possible.

"With ongoing work on drafting of GST law, this further gives assurance to the industry that GST is not far away. One would hope that the GST network would be ready for testing in time," he said.

All states will use common IT processes under the GST and most are revamping their systems. Registrations on the portal are expected to begin from January.

(Image: Indiatimes)