New Delhi/Bengaluru: India has awarded a contract worth 1,380 crore to Infosys Ltd to build and maintain the technology network crucial for implementing the proposed goods and services tax (GST) system across the country for five years, an official aware of the matter said on Monday.

The government had created a company called GST Network (GSTN) to provide the technology backbone to introduce GST and connect the databases of states and the centre.

The information technology (IT) system will allow taxpayers to register themselves using their permanent account numbers and file tax returns, as well as process payments online. This will also allow collation of data at a central level after which it will be transmitted to the state tax departments, thereby preventing tax evasion and widening the tax base to include more traders.

“Infosys has been awarded the contract of 1,380 crore to build and maintain the GST system. After the system is operational, Infosys will operate the system for a period of five years," said Navin Kumar, chairman of GSTN.

Infosys, India’s second largest software services firm by sales, will start working on building the technology interface of the GST portal where taxpayers can register themselves, make payments and file returns, from 1 October. It has been asked to complete this process by the end of March.

The government had hoped to rollout GST from 1 April 2016, but its implementation is likely to be delayed with the Constitution Amendment Bill necessary for its rollout still pending legislative passage in the Rajya Sabha.

Despite this, GSTN is striving to meet the 1 April deadline, Kumar said.

“It was a selection based on both technical and commercial considerations. It was both cost and quality based", he said, commenting on Infosys’s selection.

According to existing government guidelines, open-source technology will be used by Infosys. Tata Consultancy Services Ltd, Wipro Ltd, Tech Mahindra Ltd and Microsoft Corp. were the other companies in the fray, Kumar confirmed.

Infosys had, in 2012, won a $50 million contract to maintain and develop a website for the government’s corporate affairs ministry for more than six years. A spokeswoman for Infosys declined to comment.

A strong technology backbone is imperative for the successful rollout of GST—a tax reform that seeks to economically unify the country by subsuming a slew of indirect taxes levied by the central and state governments.

In the first stage, GSTN will create a seamless technology platform across the country to enable uniform registration, return, refund and payment system. In the second stage, it will develop systems for assessing and auditing tax returns and filings.

It will be compulsory for dealers with a turnover of more than 10 lakh to register with GSTN. Dealers can register themselves on the portal automatically within three days after applying for registration without any verification by the state government.

On how GSTN will ensure that timely payments are made to Infosys, Kumar said that the payment structure was clearly spelt out in the request for proposal (RFP).

“During the development stage, the payment will be made for various milestones. So there will be timely payments for the costs incurred for installing the systems. Once the operations begin, the payments will be made on a quarterly basis," he said.

Delay in payments by the government has been one of the major concerns of IT companies who have won government contracts in the past.

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