The Cabinet Wednesday cleared a proposal to convert GST Network (GSTN) into a government-owned company, Finance Minister Arun Jaitley said.

Briefing reporters about the decisions taken in the Cabinet meeting, the finance minister said that 50 per cent stake will be owned by the Centre and the remaining by the states on pro-rata basis in the new structure.

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Currently, the Centre and states together hold 49 per cent stake in the GST Network, the company that provides IT backbone to the new indirect tax regime. The remaining 51 per cent is held by five private financial institutions — HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd.

The proposal to convert GSTN into 100 per cent government-owned company was earlier approved by the all-powerful GST Council.

The GSTN was incorporated as a private limited company on March 28, 2013 under the UPA government. It is a Section 8 company under the new Companies Act and hence is a not-for-profit entity.