SRINAGAR: With two days left for implementation of new tax regime in the country, Jammu and Kashmir Finance Minister and senior PDP leader Haseeb A Drabu on Wednesday said the PDP-BJP coalition government in the State has convened All Party Meeting (APM) tomorrow to take a final call on implementation of Goods and Services Tax (GST) in the State.
“Apart from safeguarding the special constitutional position of Jammu and Kashmir, we will also factor in administrative, legislative and other safeguards under the new tax regime,” Drabu told reporters, here.
He said the government has been discussing the new tax regime at various levels to build broader consensus before bringing the State under the ambit of GST regime.
The FM said the PDP-BP coalition government has already convened two All Party Meetings (APMs) on the issue and third such meeting will be held tomorrow in Srinagar during which threadbare discussions will be held and everyone will be taken on board. In the last APM meetings, there was no consensus on GST implementation with opposition parties expressing their resentment over its implementation.
The ruling BJP favours implementation of GST in the State while PDP is moving cautiously and wants to take opposition parties on board. Drabu said the government was trying to build a consensus as the situation in the state is fragile and they do not want to create a social chaos.
“The government does not want to preempt anybody and wants to understand the views of the opposition parties. We will take a final call on GST implementation tomorrow after getting a full understanding of parties during the APM,” he said. According to Drabu, the biggest beneficiaries of the next tax regime, which would be implemented in the country from July 1, would be the consumer. “The consumer states will benefit the most instead of manufacturing states getting the cream under Sales Tax and VAT regimes”.
Terming apprehensions that GST implementation would erode State’s special status, he said a false perception is being created among people regarding the new tax regime. “Under the new tax regime, the special position and Article 370 will not be eroded. There is no such thing of compromise on existing position. There would be no compromise in existing constitutional position,” he said.
The opposition parties, traders in Kashmir and separatists groups have opposed implementation of GST in the State. "Our intentions are clear. Unfortunately, a completely wrong perception has been created by vested interests among the people about GST. Let me make it clear that we will ensure adequate safeguards for the State’s fiscal autonomy while implementing GST," Drabu asserted.
He said J&K has the most empowered legislative assembly having residuary powers. "The harmonization that has happened in the GST Council over the years made me comfortable with the evolving system, despite my initial opposition to it”. “When I today support it (GST), I support it because it has enough flexibility. For instance, the biggest flexibility is the first time constitution amendment to the Indian constitution specifically mentions that this is not applicable to J&K, that itself shows the respect shown by the Parliament of India and Government of India for the special position of J&K,” he said.
Drabu said the State is going through very difficult times. The situation, he said, is fragile and we don't want social chaos which ultimately impacts our economy. “Under the new tax regime, our powers to levy tax remain unchanged".
He said in absence of an alternative trading link, J&K is literally integrated with mainland Indian market.
“Entire requirements are imported from various parts of the country and everything produced or manufactured in J&K is exported to the same market. Twin taxation systems dissociated from each other will entail huge costs to business and to public finance system,” he said adding 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 traders will have to pay more for managing twin systems and it could create a situation that J&K may not get buyers or sellers. The Input Tax Credit (ITC) that shall otherwise become available to the end consumer will get blocked at Madhavpur, the first town outside J&K.