Is GST another blow to financial independence of J&K? – Kashmir Reader

Srinagar: The Mehbooba Mufti government will soon be convening a special session of the legislative assembly to introduce a bill that will merge different taxes into one Goods and Services Tax (GST). The state of Jammu and Kashmir is the only state in the Indian Union that will do so, the others merely following the GST slabs that the government of India will notify. This is because the state of Jammu and Kashmir enjoys a special status under Article 370 of the Indian Constitution. This special status has over the years been undermined in many ways. Could the GST be another blow to it? Economics professor Nisar Ali is of the view that if the JK Assembly passes an exact replica of the GST bill as passed by the Indian Parliament, it will be a violation of the spirit of autonomy enjoyed by the state. If the government passes the (GST) bill as it is, it will be a clear signal that they are violating their own Constitutional act of 1960 in virtue of having special status under Article 370. It goes against the spirit of autonomy of J&K, Ali told Kashmir Reader. He said that J&K enjoys special powers of levying, collecting and implementing taxes by its own agencies or departments, powers that with the implementation of GST would directly go to New Delhi. Ali criticised the Mehbooba Mufti government for not consulting the business community and trade organisations of Kashmir on the GST. He said the government must hold a dialogue with business bodies before convening the special session of the legislative assembly. Only when you have taken the main stakeholders on board will you succeed in customising the proposed bill to suit the states interests. The government also needs to exempt state exports from the tax as we have a very limited exports business of fruits and handicrafts, he said. JK finance minister Haseeb Drabu has said that a special session of the assembly would be convened to approve the GST bill which will be in consonance with the states existing constitutional position. Indian finance minister Arun Jaitley has also assured the J&K government of all possible help in restructuring the GST in accord with the special status of the state. What remains to be seen is whether the bill that the JK assembly passes is in accord with its special status or contrary to it. Ejaz Ayoub, a financial expert based in Srinagar, says that the states fiscal powers are being diluted by the GST. Previously, JK had its own monetary as well as fiscal powers to manage interest rates and taxes. But during the National Conference government, the monetary powers were handed over to New Delhi. Now our fiscal powers, too, are being diluted and snatched away with the GST. The PDP had raised a hue and cry when our monetary powers were being given to New Delhi but now the same PDP is following in the footsteps of the NC, he said. Ejaz pointed out that it took India almost 17 years to decide on the GST, but J&K has been given too insufficient a time to get the law ready within a month. Even if the government says that they dont have to frame an entire act but only have to make certain changes, we still need a good amount of time to reach consensus on the many issues involved in the GST. Our state has divided opinions Jammu has one view while the Valley has another. It is not only the legislators who have to discuss or debate the tax; traders must also be informed what the customised bill contains. There are also legal issues involved with it, he said. The J&K government had hired the Chartered Accountants Association of India to assess whether the GST would be beneficial to the state or not. The association submitted its report to the state government in 2016, recommending the GST. The report, a copy of which is with Kashmir Reader, said that the state will enjoy tax benefits of Rs 1,500 crore to Rs 2,000 crore if the GST is implemented. The report, however, was kept in official rooms and nothing was made available to the general public or to the business organisations of Kashmir. Associate Professor, Department of Law, Kashmir University, Rafiq Ahmad told Kashmir Reader that the GST is in clear contravention of the states special position and is an attempt to integrate the state further into the Indian Union. Economic forums like the Kashmir Chamber of Commerce & Industries, the Kashmir Economic Alliance, the Kashmir Traders and Manufactures Association, and the Federation of Commerce and Industries in Kashmir have welcomed the GST legislation, but at the same time warned of an agitation if the GST takes away the special status of J&K.

CM Mehbooba Mufti, Goods and Services Tax

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Is GST another blow to financial independence of J&K? - Kashmir Reader