Jammu & Kashmir enjoys a separate constitution than rest of the country and hence the historic tax reform which was rolled out by Prime Minister Narendra Modi on 1st July does not to apply to it.
However, amid strong reservations by the opposition, J&K assembly passed a resolution on Wednesday (4th July) to implement the Goods and Services Tax or GST in the state. The opposition feared that extending GST regime in J&K state will undermine the special status of their state. Now, the state cabinet of J&K will recommend the resolution to President Pranab Mukherjee and with the help of a Presidential order, the GST tax reform will be extended to Jammu and Kashmir.
The resolution by the state cabinet made it very clear that although they accept to implement the new tax reform; it shall not erode the constitutional status of the state and they need protection for the fiscal autonomy of the state.
The state cabinet wants GST to be extended in a modified manner. They demand safeguards in existing constitutional position of Jammu and Kashmir in the Union of India.
"I will reiterate... that implementing GST module in Jammu and Kashmir will not and shall not and could interfere with the special status of Jammu and Kashmir," said Bharatiya Janata Party’s legislator R S Pathania who explained party's stand in the house.
The opposition wants the J&K government to pass a similar act instead of implementing GST in its present form. They think that once GST is implemented, Jammu and Kashmir will lose its fiscal autonomy, right now, Jammu and Kashmir enjoys special privileges of imposing taxes as and when they want.
"Even now central service tax is being collected by state government and is passed on back to Government of India. This is no big deal. Only thing is, you have to do it within jurisdiction of state constitution," said Nawang Rigzan Jora, Congress legislative party leader.
The residents of J&K are apprehensive about GST in their state, thousands of financially poor artisans are involved in exquisite handwoven Kashmiri shawls in Srinagar; till now, handcraft sector is tax free in the state. They are worried about their trade once GST is implemented.
Tariq Ahmad, owner of a cottage shop selling exquisite handwoven Kashmiri shawls said "Our artisans earn 150-200 rupees per day. How he can give us input cost of GST? We can't get that input cost. If GST applies in this, the trade will go."
Let’s hope J&K finalizes their decision of implementing GST, and it helps improve the economy of our country as well as minimize the problems the government of India has with Jammu and Kashmir.
On 3rd April 2005, The Jammu and Kashmir Value Added Tax Act or the Jammu and Kashmir VAT Act came into force.