Srinagar: – The Jammu and Kashmir Government has failed to arrive at a consensus on the implementation of the Goods and Services Tax in the state.
At the all-party meeting that took place on Tuesday, the opposition stuck to their stance that the law would only further weaken the special status of the J&K state.
Syed Shakeel Qalander, the Chief Election Commissioner of Federation Chambers of Industries Kashmir (FCIK) said, Presently state enjoys the powers to tax any commodity or service. By introducing GST, the Central Government is only going to further gain physical autonomy over us
Shakeel said that the Article 370 of the Constitution grants special autonomous status to the state of Jammu and Kashmir. However, the Parliament of India retains the power to make laws on defence, external affairs and communication-related matters of the state. This is one of the reasons why the Service Tax levied all over the country since 1994 is still not applicable in J&K. The state levies its own taxes for services provided.
Impact of GST on J&Ks economy
The state of Jammu and Kashmir is currently generating its resources from VAT, Octroi and Entry Tax, State Service Tax etc. If and when GST is extended to the state the VAT will be replaced with State Goods and Services Tax (SGST).
J&K broadly being a consumer state, is expected to enhance its tax resources by about 1000-1500 crores. However, if GST is implemented the state will lose about 700 crores bound to be generated from Octroi and Entry tax. Besides this, 50%, of an income of around 1000 Crores from Service Tax, presently retained by the state, will have to be shared with the Centre. This would result in a loss of further 500 crores. The subsuming of Octroi and Entry tax in GST has categorically been provided in the GST bill passed by the centre and any escape on this account looks doubtful right now, said Shakeel.
By abolishing Octoi and Entry taxes on the goods manufactured and brought from outside the state, the competitive capability of the local entrepreneurs will get highly stiffened. This will result in a choking of private sector in J&K.
What is GST
Goods and Service Tax (GST) will be a comprehensive and single indirect tax paid by a consumer on purchase of goods or availing of services. This single tax is levied on the goods and services right fom the stage of manufacturing till the product is consumed. Hence the tax is a value addition tax imposed at each stage of product supply. Currently, consumers pay various indirect taxes like Central Excise Duty, Central Surcharges and Cess, Central Sales Tax, Central Service Tax, State Value Added Tax (VAT), Entertainment Tax, Octroi and Entry tax , Luxury Tax.
However, the rate of tax charged by the retailers from their consumers would be 0%, 5%, 12%, 18% and 28% except for petroleum products, alcoholic beverages, tobacco and diesel which have been kept outside the purview of GST and will be taxed at higher rates.
While this one tax may benefit traders in a normal state, it would often be a headache for traders of J&K as everything from filing of returns to tax payments is system generated. The whole system is depended on a networking system which is still a distant reality in the state particularly in Kashmir and other backward areas said Shakeel to Kashmir Observer.
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