Government to Overhaul GST Technology Support, Invites Bids for Next Provider in March 2024
The Indian government is set to usher in a new era for Goods and Services Tax (GST) technology support by inviting bids for the next service provider in March 2024. The move aims to reduce dependency on a single entity, with considerations for separate contracts for hardware and software consultancy providers. A senior government official revealed that Ernst & Young (E&Y) has been appointed as the consultant for formulating the Request for Proposal (RFP).
End of Infosys Contract
The current contract with Infosys, the technology support provider for GST, is scheduled to conclude on September 30, 2024. The government's decision to explore new options comes after facing implementation challenges in the initial years of GST, leading to glitches in the Goods & Services Tax Network (GSTN).
Shift in Service Model
The government has operated under a managed service provider model with Infosys, wherein the company handled both hardware and software requirements. However, officials are now contemplating whether to maintain the same model or separate software and hardware providers to mitigate dependence on a single company.
Consultation with Ernst & Young
E&Y is actively engaged in discussions with the government to assess the feasibility of having two GST support providers. The upcoming bids will be invited for a contractual period of seven years, with a focus on ensuring a smooth transition and efficient GST technology support.
Past Challenges and Future Focus
In the early years of GST implementation, glitches in the GSTN prompted government intervention, with Finance Minister Nirmala Sitharaman urging Infosys to address issues related to the GST portal. With hopes that the major complications have subsided, the government aims to attract global interest in the bidding process, anticipating the participation of multinational corporations (MNCs).
Potential Concerns
While considering the advantages of having two consultants, the government is mindful of potential challenges, including vendor disputes and blame-shifting. The official acknowledges the need for careful consideration in this regard.
Contractual Details
The upcoming contract is proposed to be on a cost-plus model, allowing the government to handle additional expenses separately. Over the last five years, the government has spent Rs 1,700 crore on Infosys for GST technology support. The initial contract with Infosys, amounting to Rs 1,380 crore, was awarded in 2015 for building and maintaining the IT backbone for the GST regime.
Global Participation and Future Focus
With no restrictions on global companies bidding for the contract, the government is optimistic about attracting interest from multinational corporations. As the GST system stabilizes, the government's focus will shift towards e-invoicing technology support, reflecting a commitment to staying abreast of evolving technological requirements.
Extension Possibility
The government remains open to extending the Infosys contract by an additional six months if necessary, emphasizing flexibility in the transition process.
In conclusion, the government's decision to revamp the GST technology support structure signifies a strategic move towards enhancing efficiency, reducing dependence, and embracing technological advancements for the future of India's Goods and Services Tax system.
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