Jammu And Kashmir Parties Form Consensus on GST, But With Riders

Srinagar: The second meeting of an all-party consultative group, constituted by the Jammu and Kashmir government to evolve a consensus on the GST implementation in the state, was held here this evening.

The government claimed that the parties were in agreement on the extension of the new tax regime but with safeguards to protect the fiscal autonomy of the state.

"There was a general consensus in the meeting that non-implementation of the GST regime would trigger economic and financial chaos in the state with the inter-state trade vis-a-vis J&K taking a big hit," an official spokesman said here.

He said the meeting was held under the chairmanship of former deputy chief minister and MP Muzaffar Hussain Beigh.

The members of the consultative group including former finance minister and NC leader Abdul Rahim Rather, CPI(M) state secretary M Y Tarigami, Congress leader Aijaz Ahmad Khan, Hakim Mohammad Yasin of PDF, Nizam-ud-Din Bhat of PDP, Sunil Sethi of BJP, Ghulam Hassan Mir of DPN and Independent legislators Sheikh Abdul Rashid and Pawan Gupta attended the meeting.

The meeting held threadbare discussions over the legal, legislative, financial, economic and administrative aspects of the Goods and Services Tax (GST) regime with the chairman explaining in detail the nuances of the new tax regime.

The spokesman said Beigh complimented the state government for having initiated a debate on the issue with all shades of the political opinion to evolve broad-based consensus before Jammu and Kashmir is brought under the tax regime.

"If we talk of bringing a separate law, the Centre will have to amend two chapters in the Constitution to delegate powers of taxation to the state of J&K. It will become a huge political issue across the country.”

"Besides, it will also entail amending Section 5 of J&K Constitution which can't be done. More so, any attempt on fiddling with Section 5 will open a Pandora's box which will have huge political ramifications for J&K in future," he said.

Presenting the government's view, Finance Minister Haseeb Drabu said the government will ensure adequate safeguards for protecting the special constitutional position of Jammu and Kashmir as enshrined in Article 370 of the Indian Constitution.

Regarding GST, the finance minister said it would be an integrated tax regime which would replace 16 taxes currently being levied by the Centre and the state government.

Drabu said the existing tax incentives under the industrial policy will be continued and the cross-LoC trade can be maintained in the current form.

"In case the GST is not extended to the state, the businesses will be crippled as no trader from Jammu and Kashmir will be able to do business with their counterparts from other parts of the country," Drabu said, adding the consumer in J&K will be the worst hit due to double taxation.

Drabu said in the absence of an alternative trading link, J&K is literally integrated with mainland Indian market.

"Entire requirements are imported from it and everything produced or manufactured in J&K is exported to the same market. Twin taxation systems dissociated from each other will entail costs to business and to public finance system.”

"Trading processes will be subjected to twin taxation systems making everything costly in J&K, a cost that ultimately the consumer shall have to bear," he said, adding traders will have to pay more for managing twin systems and it could create a situation that J&K may not get buyers or sellers for its products.

NC's Rather, who is the former chairman of the Empowered Committee of Finance Minister on GST, said his party was not against the implementation of the GST in the state in principle but it wanted adequate safeguards to protect the fiscal autonomy of the state.

Khan of the Congress said his party had piloted the evolution of the Goods and Service Tax regime across the country.

"Our party has laid the foundation of GST. We are in favour of it but we are concerned about how it is implemented in J&K. The law must be introduced in an applicable form in the state," he said.

Tarigami said consultations were beneficial for evolving a consensus but stressed that Article 370 should not be belittled.

"We have to take people along to preserve the relationship between India and J&K. I congratulate the government for debating the issue with us," he said.

The all-party consultative group had earlier met here on June 24 to discuss the issue.