Govt has done a flip-flop on GST implementation

State government has turned to contradictory claims over the implementation of the goods and services tax (GST) which is likely to be rolled out on July 1 across Kashmir.

When discussions were being held on the GST, Finance Minister, Haseeb Drabu, said that there were issues related to the GST implementation. He said that there are two aspects to the GST.

“In a tax regime like GST what J and K has an issue is with that the current draft doesn’t incorporate any safeguards to protect the special status of J and K.  J and K is the only state in the country that has the right to levy tax on services.  Our position is that we will not compromise our special position in the Union as regards our power to tax, yet we want to be in the ambit of new regime that will benefit us. If we are not a part of GST regime we will lose enormously. We get exemptions and our industry will be wiped out.’’

Drbau said that he raised the issue that the GST Council shouldn’t determine the tax rates for Jammu and Kashmir, but in a recent meeting of the council in Srinagar he said that it was a most federal structure in the country.

“In the Empowered Committee I raised the issue that the GST council which has the mandate to approve or reject any changes in the rates and all shouldn’t be a pre-requisite for application of GST to J and K because virtually the GST council over-rides the state legislatures. The GST council shouldn’t be a pre-requisite for the GST in J and K, ’’ Drabu had said.

However, after the GST council meeting in Srinagar, Finance Minister said that the GST Council was a federal structure.  He said that the GST Council was the first federal institution stating that the “new tax regime will pave way for co-operative federalism”.

 He said that the GST regime will “ bring major changes in the fiscal and political side of the India’s federal structure because of which coercive federalism will pave way for co-operative and competitive federalism.’’ “ The economic reforms ushered in 1991 didn’t seek to consul the states. Now in 2017, with the GST being rolled out on July 1, every single state has been taken on board.’’

Although the government has cleared the GST draft in the cabinet meeting which was held recently, it has not clarified on how it could set its own tax rate to tax different goods and services. A special assembly session has been convened and an all-party meeting is being held tomorrow after the Opposition raised concerns that the GST implementation would erode the special status of the state.

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