The state of Jammu and Kashmir will not come under the purview of the GST framework. The state government will bring forth a separate proposal on how to participate in the GST structure without losing its powers of taxing services.
J&K finance minister Haseeb Drabu clarified on Saturday the state’s position with regards to the GST bill which seeks to have a unified taxation structure across the country. The minister said that the act would not extend to the state in its present form.
The J&K government will bring a separate proposal, and the submissions were made at the gathering of the Empowered Committee of Finance Ministers of various state assemblies which took place on 26 July 2016.
The state of J&K enjoys a unique place due to the article 370 which gives it certain powers which include the authority to tax services, something which no other state of the Indian Union enjoys. Mr.Drabhu’s proposal was accepted by the committee and asked the state to come with its recommendations which will be then studied.
The meet was also attended by Union Finance Minister, Arun Jaitley who clarified that the state would have the final say in how to apply the GST and ensure safeguarding its taxation powers.
The GST Bill had a long and tortuous journey and is now in the Rajya Sabha where it will be taken for discussion. The bill has met with fierce resistance from the opposition Congress. The Kashmir finance minister was of the view that there are certain debatable issues in the existing GST law that need to be addressed before extending the new tax regime to J&K.
Drabhu stated that once enforced, the GST Council will become a new power center and will be made stronger than the state legislatures. It is a big issue for the state and needs to be sorted out before the act is enforced in the state. He also talked about the exemptions enjoyed by different industries in the state and what will come of it in the new setup.
Drabhu clarified that the state government gives various tax exemptions to the industry. The GST regime will end all these tax exemptions, and the state will have to take care of these issues before it can become a part of the unified taxation process.