New Delhi: Implementation of GST in Jammu and Kashmir marks economic integration and would help increase the revenues of the state, Finance Minister Arun Jaitley said on Wednesday in the Lok Sabha which passed two bills extending the Central GST and Integrated GST to the state.
The Central Goods and Services Tax (Extension to Jammu and Kashmir) Bill and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Bill are aimed at giving effect to the formal amendments required in Central GST (CGST) and Integrated GST (IGST) Acts by removing the exemption that was carved out for J&K.
Jaitley said the GST is in the larger interest of traders and consumers of Jammu and Kashmir and that the state government, its assembly and people should be “complimented” for the roll out.
“If they (J&K) didn’t integrate, then the traders would not have got input credit and the tax on final products would have been higher… That would have made products costlier and consumers would have to pay more,” the minister said.
“J&K is a consumer state and GST being a destination- based tax, the revenues of the state would increase,” he said.
The CGST (Extension to Jammu and Kashmir) Bill, 2017 provides for levy of the GST on goods sold and services rendered in the state while the IGST (Extension to Jammu and Kashmir) Bill, 2017 seeks to levy the tax on inter-state movement of goods.
The two bills were introduced in the Lok Sabha on July 31.
Participating in the discussion on the bills, Adhir Ranjan Chowdhury (Cong) asked the government to ponder why it is taking recourse to Ordinance for every legislation.
He said while the UPA government was accused of policy paralysis, the present government is undergoing “policy dialysis” and hence there was “economic stasis”.
“When we have access to Parliament, we should not frequently resort to Ordinance,” he said, adding the government had failed to impress upon the J&K government to implement GST from July 1.
Chowdhury said GST, as implemented, cannot be called ‘one nation, one tax’ as nearly 50 per cent of the GDP remains out of its ambit.
“Given the sensitivity of the J&K region, you should have been better prepared before introducing the tax regime,” he said, adding the apprehension of people of the state should be allayed by assuring that Article 370 giving them special status as well as fiscal autonomy would not be tampered with.
Shashi Tharoor (Cong) said that extending GST to J&K has “serious impact” as it alters the taxation power of the state and by “impinging” on the state’s right the Centre is violating the Constitution.
“J&K must be approached with sensitivity, but no sensitivity was shown as the bill was passed in assembly when Opposition was not present… It could signal future problems,” Tharoor said.
He said the state has been dealing with conflict and the government should not do anything which impacts its stability.
“GST was implemented in extreme haste… GST Network is in shambles,” he said, adding Malaysia was given one-year time before GST was implemented there.
While the Centre had promised a simple tax, in reality GST has become ‘one nation, three slabs and six taxes’ (0, 5, 12, 18, 28 and 40 per cent), Tharoor said, adding the structure is “irresponsibly complicated”.
The Congress leader from Kerala said that J&K is facing increased terrorism and “we need to do everything to protect the interest” of the state and see that it is not undermined by “finance ministry’s terrorism”.
Kalyan Banerjee (TMC) said the cost of most of the goods and services have increased post the GST and the GST Council has “arbitrary” powers to fix rates even without consulting Parliament.
During Banerjee’s speech, Congress leader Mallikarjun Kharge pointed out that the finance minister was not present in the House, while the treasury benches contested that Minister of State (MoS) for Finance Santosh Gangwar was present.
As the House saw uproar over the issue for a brief time, Minister of State for Parliamentary Affairs S S Ahluwalia said “cabinet system is a collective responsibility and two cabinet ministers and MoS Finance is sitting here”.
The GST, which replaced more than a dozen central and state levies, came into effect from July 1 all over the country, but the J&K assembly passed a resolution adopting the constitutional amendment only on July 5.
Thereafter, the president issued an ordinance extending the provisions to the state. This was necessary because of the special status that Jammu and Kashmir enjoys in the Constitution.
The state of Jammu and Kashmir passed the Jammu and Kashmir Goods and Services Tax Act, 2017 which came into force on July 8, 2017.
But with the state adopting the law, ordinances were promulgated. And now the legislations have been brought in Parliament to replace them.
As Parliament was not in session and an urgent legislation was required to be made, the president promulgated the Central Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 on July 8, said the statement of Objects and reasons of the two bills.