New GST regime divides Jammu, Valley traders

Sumit Hakhoo

Tribune News Service

Jammu, May 22

Days after a hint from Finance Minister Haseeb Drabu that Jammu and Kashmir may not implement the Centre’s goods and services tax (GST) regime, the issue has exposed a deep regional divide between the business communities in the Jammu region and the Kashmir valley.

Trade bodies in both regions are on opposite sides over the issue with the Chamber of Commerce and Industry (CCI), Jammu, vouching for its implementation and the business community in Kashmir opposing the new tax regime, citing special status of Jammu and Kashmir under Article 370.

The Jammu and Kashmir Government has been arguing with the Centre that GST, if implemented in its present form, will bring to an end the autonomy of the state in terms of taxation.

Narendra Modi-led NDA government intends to implement GST by April 1, 2016, aiming to dissolve all existing taxes into one and making India a single national market. At present, the Constitution Amendment Bill on GST is being examined by a select committee of the Rajya Sabha. The Bill has already been passed by the Lok Sabha.

“We will oppose the Bill at any cost. Our priority is to safeguard special status of Jammu and Kashmir. GST will erode financial autonomy of the state. We have made our stand on the issue clear to the government a number of times,” said Sheikh Ashiq, president, Kashmir Chamber of Commerce and Industry.

Central taxes include excise duty, service tax and additional customs duty while state taxes comprise entertainment tax, luxury tax, lottery tax, electricity duty, central sales tax, octroi, value added tax. GST will cut down a large number of taxes imposed by the Centre and state governments, which will facilitate seamless movement of goods across states and reduce transaction cost.

Jammu CCI president Rakesh Gupta expressed surprise over the stand of the PDP-BJP government in the state. He said the new tax regime would do away with archaic taxes and turn out to be good for expansion of trade and industry.

“We do not believe in any special status if it hurts business. The economy of Jammu and Kashmir is already deeply integrated with the rest of India. The GST regime is good for the state and should be implemented. It will reduce prices of goods and services in the long run and improve the efficiency of services,” he said.

By virtue of its separate Sales Tax Act, Jammu and Kashmir has the power to tax both goods and services. All other states in India have the power to tax only goods. Under the GST regime, Jammu and Kashmir will have to surrender the authority to tax goods and services granted by the Indian Constitution.