GST: J&K can't look away

As the country awaits nationwide rollout of Goods and Services Tax (GST) -the most modern uniform taxation system -on Jammu and Kashmir. After its passage by the Parliament and various state Assemblies, the GST is a countrywide law which is becoming application across the country except Jammu and Kashmir until it is ratified by the state legislature.

Though the recently passed Goods and Services Tax Act excludes the state of Jammu & Kashmir from its applicability, this is not to be interpreted to mean that GST will not be implemented in the state. There are no second thoughts about it despite the strong opposition from the separatists camp but also mainly from the National Conference and Congress.

The Article 370 of the Constitution grants special autonomous status to the state of Jammu and Kashmir. However, the Parliament of India retains the power to make laws on defence, external affairs and communication-related matters of the state. This is one of the reasons why the Service Tax levied all over the country since 1994 is still not applicable in J&K.

The state levies its own taxes for services provided. Nevertheless, the state government of J&K can still integrate its revenue with Goods and Services Tax, provided they pass two separate bills in their state assembly. The J&K Assembly will have to pass a legislation stating that the two laws viz. Central Goods and Services Tax (CGST) and Integrated Goods and Services Tax (IGST) are applicable to them. This approval by the state assembly will be in addition to the requirement of all states to approve the State GST law. Once this is done, the Central government will again be required to amend the CGST and IGST law and extend the applicability to the state of Jammu and Kashmir; which is currently not the case. The Opposition parties including the National Conference and the Congress is completely opposed to implementation of GST 'in its present form'.

The business community in Kashmir is also highly apprehensive. The business community has gone to the extent of saying that they would be happy to pay more taxes but are not ready to see any compromise on the fiscal autonomy of Jammu and Kashmir. The state government has been reiterating a point that while most central laws were extending to Jammu and Kashmir in the past by mere Presidential Orders but this time a constitutional amendment is being debated in the legislature. However, the government is wrong on one count: the draft Bill should have been put in the public domain for discussion which could have allayed fears, if any.