GST Gets IT Framework, to Treat PAN as The Unique Identity For All Taxes Paid

States have agreed to roll out the IT framework needed for the proposed goods and service tax (GST), raising hopes for an early resolution to the deadlocked discussions on the government's efforts to reform the indirect taxes regime.

"States have given an in-principle nod to launch the IT framework ahead of schedule," said Sushil Modi, Bihar deputy chief minister and chairman of the empowered committee of state finance ministers.

The rollout of an IT framework will allow traders all over the country to use their permanent account number, or PAN, as the tax identification number for all direct and indirect taxes in the country. "For the first time PAN will become a kind of unique identity for all taxes paid across the country," Nandan Nilekani, chairman of the empowered group on IT infrastructure for GST, told ET.

A common identification number benefits not just taxpayers but also helps authorities keep tab on transactions by establishing links with other tax payments.

Taxpayers would be able to register using their PAN and also be able to file a common return form.

Industry says a robust IT framework under GST could help curb tax evasion. "If somebody has to evade taxes under GST, buyers and sellers both have to connive. Moreover, with effective IT framework keeping a tab on all transactions, the avenues for evasion will be much lesser," said Sachin Menon, co-chairman of FICCI's task force on GST.

Nilekani said a pilot of IT framework has already been launched in 11 states including Mahrashtra, Karnataka and Gujarat, and now it would be implemented countrywide after the final approval.

Nilekani, however, declined to give a timeframe for the roll out, saying it would be done once all approvals were in place.

IT infrastructure is crucial for the success of the proposed GST, which will replace a plethora of indirect taxes including excise duty, service tax, value-added tax, octroi. "Without a well designed and well functioning IT system, the benefits of GST will remain elusive," the empowered group had said in its report.