Jammu and Kashmir yet to implement GST, aims to build broader consensus

Unlike other states, it would take a legislative amendment to adopt GST in the state.

The Goods and Services Tax (GST) comes into force on Saturday but Jammu and Kashmir is yet to introduce the new tax structure with the state government discussing the issue at various levels, including opposition parties, to build a broader consensus before bringing it.

A round-table conference being held to discuss implementation of Goods and Services Tax in Jammu and Kashmir, in Srinagar on Thursday.(PTI Photo)

The state’s move not to introduce GST could become a political embarrassment for the NDA government, though the financial loss will be more for the state, finance ministry officials said.

Political pundits, however, hoped that the state will decide to implement GST before midnight of June 30 when it will be rolled out by President Pranab Mukherjee and Prime Minister Narendra Modi.

“In case, the state does not come on board, gradually it may not be able to sell its products to other states and this will create problems for the people of the state,” Navin Kumar, chairperson of GST Network, told the Hindustan Times.

Analysts said goods, especially handicraft items, being sourced from J-K will be difficult to get outside the state.

Finance minister Arun Jaitley also said the prices of goods in the state will increase in case it decided to stay outside the GST net. Jaitley said any delay in introducing GST would create a disadvantage for both consumers and the industry in the state in the intervening period.

J-K’s finance minister Haseeb A Drabu said on Thursday the state government will factor in constitutional, legislative, administrative and institutional issues distinct to the state while implementing GST.

Drabu also said non-implementation of GST would lead to complete chaos with traders and businessmen being hit the worst and ultimately it would lead to acute scarcity of consumer goods in the state.

Unlike other states, it would take a legislative amendment to adopt GST in the state.

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”.

Barring J-K, all state governments have introduced the new tax structure, which will create a uniform and simplified structure across the country and boost government revenues.

Kerala introduced the GST through an ordinance on June 21. West Bengal too adopted the ordinance route to approve the implementation of the new tax structure. Besides, Kerala and West Bengal, Manipur, Meghalaya, Karnataka, Punjab and Tamil Nadu too approved the implementation of GST in June.

The 14th meeting of the GST Council was also held in Srinagar between May 18 and 19.