GST roll-out: State finance ministers flock at Srinagar to iron out creases, but J&K traders remain wary

Srinagar: The PDP-BJP government in Jammu and Kashmir is planning to introduce the Goods and Services Tax (GST) bill in the next 30 days in the state legislature to pass the law on its own terms to preserve the financial autonomy of the state but the law is been being opposed tooth and nail by the business community here.[caption id=“attachment_3456324” align=“alignleft” width=“380”]  Union Finance Minister Arun Jaitley with MoS Santosh Gangwar and Reneue Secretary Hasmukh Adhia addressing a press conference on the firsrt day of the 14th Goods and Services Tax (GST) Council at SKICC in Srinagar on Thursday. PTI [/caption] Finance Minister Haseeb A Drabu, while talking to reporters on the sidelines of the 14th GST council meet at Sher-i-Kashmir International Conference Centre in Srinagar, said the state will be part of the GST regime but because it enjoys a special constitutional position, the government will try and make some changes in the law. “We will try and introduce the GST bill in coming 30 days in the state legislature. Only after it is passed by the state legislature, shall we enact it,” Drabu said online the side of the GST Council meeting chaired by Union Finance Minister Arun Jaitley. The council will decide the tax rates before GST rollout from 1 July. Drabu said the “historic” GST meeting will make Jammu and Kashmir part of the economic history aimed at reordering the country’s federal polity. However, the Kashmir’s industrial bodies have opposed the move saying it would compromise the financial autonomy of the state. Kashmir Economic Alliance (KEA), chairman Farooq Dar said GST council meet in Srinagar is an attempt to erode the financial autonomy of Jammu and Kashmir. “We are not against any tax regime which is for the betterment of the business community. But Jammu and Kashmir state is not like any other state in India. It has as special status guaranteed under Article 370 under which this law can’t be implemented here,” said Dar. The 14th GST Council started on Thursday with finance ministers of 29 states and three Union Territories and Jaitley in Srinagar to attend the conclave that will decide the tariffs for various items amid polar differences on gold, handicrafts, beedi and a few small items. “State like Jammu and Kashmir will have a huge benefit. As per our estimate, we have Rs 1,500 to Rs 2,000 crore profit in tax revenue. Prices will go down for common people in coming three years,” Drabu said. “It is the most significant tax reform since Independence.” The states in India draw power to tax from Article 246 of the Constitution, but Jammu and Kashmir draws power to tax from section 5 of its own constitution. The Union finance minister assured the state government that the Centre will extend all possible help in restructuring the GST implementation for Jammu and Kashmir while respecting the special status of the state. Later while talking to Firstpost, Drabu, the former banker turned PDP politician, who was the architect of the BJP-PDP alliance, said that it is inclusiveness and participatory new approach which is the beauty of the federal structure of new India. “It is so significant and important thing that when the last time they changed the economic regime of the country there was hardly any consultation. But today we have to even consult everyone even on the change in the rates,” he said. The meeting in Srinagar is also seen as a push to divert the attention from the bad news coming out of the region, as it comes in the backdrop of a restive Valley, marked by violence and protests in recent months. The meeting is presided over by Jaitely, who arrived on Wednesday. A 140-member group of ministers and their staff will be hosted for a dinner by Chief Minister Mehbooba Mufti on Thursday. After the meeting is over, the ministers would be driven to Gulmarg for a guided tour. The meeting is slated to decide fitment of various goods and services in the multi-tier tax structure of 5, 12, 18, 28 percent, with additional cess over and above 28 percent for demerit and luxury goods. Indications suggest the government will impose a cess on luxury and other goods with a cap of 15 percent. The maximum cess on pan masala has been capped at 135 percent and for tobacco, it is capped at 290 percent or Rs 4,170 per 1,000 sticks. The environment cess has been capped at Rs 400 per tonne. Interestingly, while Jammu and Kashmir is playing an important part in the evolution of the new tax system deliberations, it is currently not joining the new regime directly. Given its special status, Jammu and Kashmir is legislating on the issue and adopting a state GST law later this year. The meeting will last for two days, beginning Thursday during which the delegates will decide the tax bands for various commodities under the country’s first, major indirect tax reform, it is likely to be called ‘Srinagar Declaration’.