Will GST Be Applicable in Jammu & Kashmir?

J&K: Current Tax System In the State

One of the biggest economic reforms the country has seen is knocking on the door of the beautiful J&K valley, despite the disturbances that plague the region. In fact, the Goods and Services Tax is expected to integrate the state of Jammu and Kashmir with the mainstream Indian economy like never before.

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.

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.

What Next?

If you are a business registered under existing tax laws and operating in the state of Jammu & Kashmir, or if you intend to start a new business there, be assured that you will need to obtain registration under the new Goods and Services Tax law. However, you may enjoy the benefit of minimum threshold limit of Rs. 20 lakh.

Let’s understand this with the help of an example. Mr. A has been involved in supplying construction material and special stones in J&K. Recently the demand of such stones has skyrocketed resulting in Mr. A’s turnover exceeding the limit of Rs. 20 lakh. In such case, Mr. A is required to register under GST law and file timely returns.

Below is a list of all the documents that a business will need to obtain registration under the new regime:

  • Provisional ID received from State/ Central Authorities
  • Password received from the State/ Central Authorities
  • Valid E-mail Address
  • Valid Mobile Number
  • Bank Account Number
  • Bank IFSC

Documents

S.No. Documents File Size Format Maximum Allowable Size
1. Proof of Constitution of Business

  • In case of Partnership firm: Partnership Deed of Partnership Firm (PDF and JPEG format in maximum size of 1 MB)
  • In case of Others: Registration Certificate of the Business Entity
PDF or JPEG 1 MB
2. Photograph of Promoters/ Partners/ Karta of HUF JPEG 100 KB
3. Proof of Appointment of Authorized Signatory PDF or JPEG 1 MB
4. Photograph of Authorized Signatory JPEG 100 KB
5. Opening page of Bank Passbook/ Statement containing Bank Account Number of < Account Number>, Address of Branch,Address of Account holder and few transaction details PDF and JPEG 1 MB

Please Note:  Electronically signing the Enrollment Application using DSC is mandatory for enrollment by Companies, Foreign Companies, Limited Liability Partnership (LLPs) and Foreign Limited Liability Partnership (FLLPs).

For other taxpayers, electronically signing using DSC is optional.

Seven states yet to pass SGST laws even as roll out deadline nears

With less than a month left for GST rollout, seven states, including West Bengal, Tamil Nadu and Jammu & Kashmir, are yet to pass their legislations required for implementing the new indirect tax regime.

So far, 24 states and Union Territories, including Delhi, Odisha and Puducherry, have passed the State Goods and Services Tax (SGST) Act in their respective legislative assemblies.

However, seven states — Meghalaya, Punjab, Tamil Nadu, Kerala, Karnataka, Jammu & Kashmir and West Bengal — are yet to pass the SGST law. Baring Jammu & Kashmir where BJP is an alliance partner of PDP, all are non-BJP ruled states.

The government plans to roll out the Goods and Services Tax (GST), which will subsume 16 different taxes, from July 1.

West Bengal wants the Centre to delay roll out of the GST by a month and the issue was raised by state Finance Minister Amit Mitra at the meeting of the GST Council last week.

Mitra said that implementation of the GST from July 1 will have “serious problems” as the IT infrastructure required to manage GST’s returns and invoice uploading are not in place.

“So far, GSTN has been able to do test drive on 200-300 companies in each state. Forms and rules have been changed in May. The (Union) finance minister has to decide whether it should go ahead with the biggest fiscal reform when the IT preparedness is not 100 per cent,” Mitra had said.

As per the GST Constitutional amendment, all states have to pass SGST bills by September 15, 2017, failing which they will lose their taxation powers.
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