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J&K to miss nation's tryst with GST

Thanks to its special status under Article 370, Jammu and Kashmir will be the only state in the country which will not adopt the GST today

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BJP activists take part in a rally to support the new GST rollout on Friday
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When India will wake up to the Goods and Service Tax (GST) at midnight, Jammu and Kashmir will sleep on it is all set to miss the bus.

Thanks to its special status, Jammu and Kashmir is the only state in the country which will not roll out the GST on July 1. Traders have called for Kashmir bandh on Saturday against any roll out of GST in present form, saying it infringes upon the special status of Jammu and Kashmir enshrined in the Constitution under Article 370.

"We will not allow GST in the present form to be implemented in the state. Loss or no loss, special status of Jammu and Kashmir is more important than anything. We want the safeguards in the GST take into consideration our special status. And these safeguards should be discussed and debated with us in open forum before taking any decision," said Mohommad Yasin Khan, President of Kashmir Traders' and Manufacturers' Federation (KTMF), an apex body of Kashmir traders and businessmen.

Even the All Party Consultative Group constituted by the government eluded consensus as most of the parties demanded Jammu and Kashmir specific safeguards before implementing GST in the state.

"If we talk of bringing a separate law, the Centre will have to amend two chapters in the Constitution to delegate powers of taxation to the state of Jammu and Kashmir. It will become a huge political issue across the country. Besides, it will also entail amending Section 5 of J&K Constitution which can't be done. More so, any attempt on fiddling with Section 5 will open a Pandora's Box which will have huge political ramifications for J&K in future," said Muzaffar Hussain Beigh, former deputy chief minister and PDP's Member of Parliament, who is also the head of All Party Consultative Group.

Jammu and Kashmir Finance Minister Dr Haseeb A Drabu said that the government will ensure adequate safeguards for protecting the special constitutional position of Jammu and Kashmir as enshrined in Article 370 of the Constitution.

"The way ahead to harmonise GST in the state could be by extension of only such limbs of the Constitutional Amendment 101 to the state which are already applicable to Jammu and Kashmir in one form or another with some other provisions of technical nature required for harmonisation of our taxation structure with the new tax regime," Dr Drabu said.

The Finance Minister said that in the absence of an alternative trading link, J&K is literally integrated with mainland Indian market. Entire requirements are imported from it and everything produced or manufactured in J&K is exported to the same market.

"Twin taxation systems dissociated from each other will entail costs to business and to public finance system. Trading processes will be subjected to twin taxation systems making everything costly in J&K, a cost that ultimately the consumer shall have to bear," he said

Dr Drabu said GST would be an integrated tax regime which would replace 16 taxes currently being levied by the Centre and the State Government. He said the existing tax incentives under the Industrial Policy will be continued and the cross-LoC trade can be maintained in the current form.

"In case the GST is not extended to the state, the businesses will be crippled as no trader from Jammu and Kashmir will be able to do business with their counterparts from other parts of the country. Consumer in J&K will be the worst hit due to double taxation," he said.

Senior National Conference leader and former Finance Minister Abdul Rahim Rather, who is the former chairman of the Empowered Committee of Finance Minister on GST, said his party is not against the implementation of the GST in the state in principle but the party wants adequate safeguards to protect the fiscal autonomy of the state.

Congress' Aijaz Ahmad Khan said his party has piloted the evolution of Goods and Service Tax regime across the country. "Our party has laid the foundation of GST. We are in favour of it but we are concerned about how it is implemented in J&K. The law must be introduced in an applicable form in the state," he said.

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