A meeting of the Union Cabinet tomorrow is likely to consider a proposal to allow a common information technology network for all states. Called the Goods & Services Tax Network (GSTN), it is expected to become operational by August this year. This will set the stage for the much-awaited GST, by ensuring integration of the tax systems of both the Centre as well as states.

Officials in the know say the government may seek Cabinet approval to set up the special purpose vehicle (SPV) with an initial corpus of Rs 2.3 crore.

The structure of GSTN has already been approved by the empowered committee of state finance ministers. It will implement a common registration based on the permanent account number (PAN), besides filing on returns and processing of payments for all states on a shared platform. The use of PAN as a common identifier in both direct and indirect taxes is likely to enhance transparency and check tax evasion.
Finance minister Pranab Mukherjee had said the GSTN would be set up as a national information utility. It will become operational by August 2012, he had announced in his Budget speech last month.

The GSTN will work for value-added tax (VAT) till the GST comes. It will give the facility of a single portal for registration, filing return and payment of the VAT. It will automatically segregate the data that needs to go to the state system. Payments will be done through the Reserve Bank of India, thus clearing accounts for the central and state governments.

The GSTN will work as an SPV. Its stakeholders will be the Union government, the states and technology partner National Securities Depository Ltd. The Empowered Committee will deliberate further on the GSTN in its meeting on April 18.

Meanwhile, the Cabinet may also consider the proposal to allow signing a Double Taxation Avoidance Agreements (DTAAs) with three countries, including France and Morocco. India had already finalised 82 DTAAs and 17 Tax Information Exchange Agreements to check undeclared assets held by Indians abroad.