File photo of GSTN’s Chief Executive Officer Prakash Kumar at a ‘breakout room’ at the company’s new headquarters at Worldmark I in the Aerocity complex
GSTN, the company that is building the world's biggest and most complex tax system, will borrow Rs 800 crore from banks to fund infrastructure costs to support Goods and Services Tax rollout from April 1 next year. The Goods and Services Tax Network (GSTN), a not-for-profit, non-government, private limited company promoted by the central and state governments, is borrowing Rs 250 crore for working capital needs and another Rs 550 crore as long-term loan from domestic lenders, its chairman Navin Kumar told PTI here.
The government of India has 24.5 per cent stake in GSTNand the state government an equal share. The remaining 51 per cent is with private financial institutions. "The total authorised and paid-up capital is Rs 10 crore. So, Rs 4.90 crore has come from central and state governments and Rs 5.10 crore from private institutions," he said. Kumar said the cost of infrastructure to support the GSTwill be Rs 1,380 crore. "We will be borrowing Rs 550 crore for infrastructure. We have also sought some working capitallimit, that we will see if there is any default in payment," he said. Since its incorporation on March 28, 2013, the GSTN had used Rs 64 crore towards payments to its vendors and employees out of the central government's sanctioned grant of Rs 315 crore for the first three years. "Government has released Rs 120 crore from the grant, and we have used Rs 64 crore, rest of the money we have to refund to the government," he said, adding this year entire expenses would be met through borrowing. Kumar said after receiving Letter of Guarantee from the government, the GSTN will raise a five-year term loan of Rs 550 crore from various Indian banks. "We have also requested for a Rs 250-crore working capital loan. So, if there is any delay by any government in making payment, then we will borrow money. We have selected the banks," he said. Explaining how the working capital and term loan would work, he said working capital loan works like a credit and at the end of the year the borrower has to square up the loans. But the payment of term loan has to be made every month. GSTN is a non-government, private limited company promoted by the central and state governments with the specific mandate to build the IT infrastructure and the services required for implementing Goods and Services Tax (GST).