Jammu and Kashmir is likely to miss the Centre’s July 1 deadline for rolling out the Goods and Services Tax (GST) across the country.
A special session of the state assembly held on Saturday to discuss implementation of the new tax regime was adjourned indefinitely after the house descended into chaos.
Unlike other states, it would take a legislative amendment to adopt GST in Jammu and Kashmir. Taking this into consideration, speaker Kavinder Gupta concluded that the state would take a call on the matter only after an all-party committee comes up with a report on the tax regime.
While the government claims that the GST would integrate the economy of Jammu and Kashmir with that of mainstream India, significantly benefitting it in the process, Opposition parties and traders fear that its implementation will compromise the fiscal autonomy and special status of the state. Traders have threatened to embark on a massive agitation if the tax regime is forced on them, and the National Conference has advised the government to desist from implementing something that would have “irreversible ramifications on the state’s fiscal autonomy”.
The Mehbooba Mufti-led government, for its part, has assured that nobody would be disadvantaged under the new tax regime. “We have made changes in federal relations with the government of India. While other states draw powers to tax from the Constitution of India, we get ours from our own Constitution. As those legislative powers have not been compromised, there is no question of compromising fiscal autonomy,” finance minister Haseeb Drabu said at a meeting in Srinagar last week.
Drabu insisted that deferring GST implementation will hit trade. “In the absence of GST, nobody will want to trade with us. And if they do trade, the consumer will be penalised through double taxation. Let me assure you that no one will be put at a disadvantage under the GST regime. In fact, Jammu and Kashmir will be the first state to carry out GST refund for shoppers on handicrafts,” he was quoted as saying in the media.
The finance minister, however, said there were several operational issues and modalities – such as Internet connectivity – that have to be worked out.