Srinagar: Jammu and Kashmir’s Finance Minister, Dr Haseeb Drabu, Wednesday called for constitution of a subgroup to weigh the odds of implementing Goods and Services Tax (GST) regime in the state having special taxation powers.
“Being the special taxation area, it has to be ensured that the taxation powers of J&K are not encroached upon under the new tax regime,” Drabu told the meeting of Empowered Committee of state Finance Ministers on GST in New Delhi.
Through this new tax regime, New Delhi intends to introduce a single rate of GST in place of central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.
The bill on GST was introduced in the Lok Sabha in December. The GST legislation, being a Constitution Amendment, will require support of the two-third members of Parliament and thereafter ratification by half of the states.
Before bringing it up for discussion in the Lok Sabha, India’s Finance Minister, Arun Jaitley, held the meeting with his state counterparts for discussions on GST.
While all other states have ratified the constitutional amendment regarding GST, the subgroup would decide on its applicability to J&K as two earlier amendments–46th and 88th – are also not applicable to the state.
Drabu argued that GST, if implemented in its present form and shape, will cost J&K its taxation autonomy.
“By virtue of its Sales Tax Act, J&K has the power to tax both goods and services. All other states in India have the power to tax only goods. Under GST regime, J&K will be surrendering the exclusive authority to tax goods and services,” he said.
Jaitley, however, has put the ball in J&K government’s court, stating that “it is for the state government to decide the manner and the method through which GST would be applicable to the state, while safeguarding its own taxation powers”.