The Goods and Service Tax has been a cause of some more rancour in J&K. After the state government failed to evolve a consensus over its implementation in the state, the special Assembly session did nothing to change the state of affairs. Both the opposition and the business community have objected to GSTs extension to the state in its current form and the modifications being dangled by the PDP-BJP coalition havent been enough to allay the fears. Finance Minister Dr Haseeb Drabus stout defence of the new tax regime has failed to convince the opponents. What is more, even the Hurriyat Conference has taken a serious exception to the GST and warned the government against its implementation. This has tied the state governments hands and made any attempt to enforce the GST on its own a fraught move. The reason for this is that the GST in Kashmir is less about economics and more about the politics and the widespread perception that its implementation will further compromise the Valleys special constitutional position under the Article 370.

Though the GST is a complex economic reform and the implications of its enactment will not be easily comprehensible to the most people, some of the broad features make it prima facie a cause of deep concern. For example, the tax regime under the GST will simplify the existing complex distribution of the taxes between the centre and the states. Instead of the two separate levies, one by the centre and another by the states, the GST will usher in a single tax regime with the states getting their respective share of the tax revenue. The states will lose their right to levy exclusive taxes as was the case so far. For example, the taxes on consumption are the exclusive domain of state governments. The GST will do away with the multiple tax regime, end tax barriers between states and the centre and the states to create a single market. While this sounds innocuous and in fact makes an eminent sense so far as the tax regime in India is concerned, Kashmir cant afford to play along without some safeguards. J&K is the only state in India which can tax services. Elsewhere, taxes on manufacture of goods or provision of services are the exclusive domain of the central government. Only consumption tax is levied by the states. So, should the GST be extended to the state in its current form, the J&K would be on par with the other states and lose the exclusive right to tax the services and also the consumption.

How would the PDP-BJP coalition get around this requirement and ensure J&K retains its fiscal autonomy while becoming a seamless part of the new national tax regime remains to be seen. As said by an NC leader, the J&K GST cant be a mirror image of the central GST. Nor a little cosmetic tinkering would do. The Government has to come up with a drastically modified GST of its own and put the new law in the public domain. The only way to extend the law to the state is to rally the public opinion around it.

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