GST: Wary J&K business community wants special treatment

The Jammu and Kashmir coalition government is upbeat over introduction of the Goods and Services Tax (GST) bill in the next Assembly session that is scheduled in a month’s time. However, many trading bodies are extremely annoyed that the taxpayers were not taken into loop ahead of the GST Council meet, which was held in Srinagar.

Union Finance Minister Arun Jaitley and the state’s Finance Minister Haseeb Drabu have assured the trading bodies and the citizens that GST would benefit them. The business community, however, still has some lurking doubts about the new tax regime due to economic conditions in the trouble-torn state, which also enjoys a special constitutional status.

Due to its special status, Jammu and Kashmir draws the power to tax from the J&K Constitution whereas all other states of India draw their powers from Article 246 of Constitution of India, according to him.

“We’re planning to introduce the GST Bill in the next 30 days in the state legislature after making certain changes in it. Only after it gets cleared by the state legislature, shall we enact it,” he said.

“The government has failed to handle the eight-month long unrest in Valley and that’s why it has held the GST meet here to make a political statement that all is well. But what’s the point in holding the GST meet here without taking the local tax payers into confidence? They could have held it anywhere else in India,” said Haji Muhammad Yasin Khan, president, Kashmir Traders and Manufacturers Federation.

“Jammu and Kashmir is a conflict zone. The business community won’t let the new tax get implemented if it undermines the state’s autonomy. We are not against the new tax regime if it safeguards the interests of local business community,” he added.

He also questioned the absence of trade representatives at the GST Council meet. Agreeing with Yasin Khan was the president of Kashmir Chamber of Commerce and Industry. Mushtaq Ahmad Wani said the economic activities in Jammu and Kashmir are different from those in the rest of the states: “Our economy thrives on handicraft, trading, horticulture produce and tourism services unlike manufacturing activities in other states. Jammu and Kashmir, therefore, deserves to be treated differently with minimum taxation imposed on its goods and services.”

Urging the state coalition government to come clean on the implementation of the new tax regime, National Conference leader Devender Rana said: “Our state has unique autonomy to impose and collect taxes. The state government must clarify as to how it intends to proceed with the GST regime without comprising on autonomous fiscal status.”

Previously, Jaitley had stated that Jammu and Kashmir was competent to bring its own law on GST in accordance with its constitutional position.

Sounding quite optimistic, Drabu assured that the state would benefit from the mega tax reforms. “Common people will benefit from the GST regime because it would decrease the cascading effect of taxes. As per our estimate, Jammu and Kashmir will have ₹1,500 to ₹2,000 crore profit in tax revenue after GST implementation. Prices will go down for common people in the next three years,” he told local media.

Notably, service tax applicable to other states since 1994 is not applicable in Jammu and Kashmir. The state government levies its own taxes in the services sector currently.