Tax on barter trade: Cross LoC traders asked to pay GST

Srinagar: The tax exempted Cross-LoC trade that runs on a barter system might now come under the new goods and service tax regime. The move has left the traders puzzled as to what mechanism will be used to evaluate the amount of taxes imposed on trade.
“Our trade was tax exempted in the previous tax regime. Now we have to pay tax in the goods and service tax,” Hilal Turkey, a prominent Cross LoC trader said. “We expressed these views before the chief minister Mehbooba Mufti who agreed to continue the exemption. Then we met the finance minister Haseeb Drabu regarding it, he out rightly refused to exempt it. He told us to either leave the trade or pay the tax.”
For the last nine years, the barter based Cross-LoC trade has not seen any upgradation of facilities despite the volume of business reaching Rs 5,000 Crore.
The unanimous views were expressed by various stakeholders at an event here on Saturday, attended by Cross LoC traders, representatives of business federations, and a representative of a political party. The event commemorated nine years of Cross LoC Trade ad was organised by the JK Joint Chamber of Commerce & Industries.
Prominent business man and former president of Kashmir Chamber of Commerce and Industry, Mubeen Shah, said that the system of trade that was set up in October 2008 has remained the same. “The trade is still being done through barter. There is no banking system in place. And if anything goes wrong between the Pakistan and India, the trade is affected. This used to happen during the initial years, it continues to happen now,” Mubeen said.
He also blamed the two countries for not wanting the trade to continue. Pakistan and India, he said, have been ‘deceitful,’ and were helped by the state government to further their agenda. The government should make use of Pakistani and Indian currency, instead of an international currency, because it is an intra-state trade and not an international one,” he added.
The Cross-LoC trade between two parts of Kashmir took off as a confidence-building measures after a mass movement in Kashmir demanded opening of the Srinagar-Muzaffarbad road for trade in 2008.
Turkey said that despite the volume of business reaching Rs 5000 crore, the trade activity was restricted to only 28 percent of working days, and the government has not taken any measures to strengthen it.
Another Ttrader, Asif Ahmad, said that the government has come down heavily on traders whenever there was an issue related to the trade. “Government has arrested three drivers who deal with the trade so far. None of them was released. Why did not the government investigate beyond the drivers? There are person who indulge in this (smuggling) activity but are from India, and none of them has been arrested. Why?,” said Asif. “Let the government put a system in place that will track down the person who is responsible, and not make traders scapegoats.”
Ahmad was referring to the recovery of cocaine worth Rs 10 crore from a truck in 2013. In January 2015, the detention of a Pakistani driver who carried a consignment of narcotics estimated to be worth Rs 100 crore for a trader in Bandipora, was at the center of a diplomatic spat between governments of India and Pakistan, indefinitely suspending trade across the LoC.
The last of such incidents come four months ago after a consignment worth billions was recovered from a truck. Since then the trade through Poonch route has been suspended.