GST bill: What next for J&K?

As the Parliament in India has finally passed the Goods and Services Tax (GST) bill, Jammu and Kashmir has to evolve a broad-based political consensus on how to position itself on the application of this law to the state. By virtue of its own constitution, J&K has the power to tax both goods and services, while as the other states of the India have the power to tax goods only. As one of the last remnants of the state's autonomy, this is a highly crucial issue for Jammu & Kashmir. As has been argued by National Conference leader and former Finance Minister Abdul Rahim Rather and other economic experts, J&K needs to take a well-thought out and considered position on the matter. Even as Finance Minister Haseeb Drabu has also hinted that the PDP-BJP government would be treading this issue with caution, there are probabilities that its coalition partner BJP might exert pressure on it towards ratifying the bill in the State Assembly. It is also probable that the party might offer the PDP some short term financial sops for the state as an incentive for backing the ratification of the bill in the State Assembly. Since the new GST architecture will allow the central government to also tax goods and the States to tax services concurrently, its extension in the current form to J&K state would deeply compromise the state's special position. J&K's legislature has the competence to enact laws on various subjects, including those specified in list II of the schedule VII of the Constitution of India. If the new GST regime is applied to J&K without exceptions to J&K's constitutional powers related to taxation, its special status in financial powers would be seriously compromised. It has been clear throughout the debate on GST that J&K would not get additional authority in lieu of its surrendering the exclusive authority to tax the goods. The GST in its current form would fetch New Delhi a broader tax base in J&K, and get it more tax resources from this state. Under the new tax regime the State government may even find it difficult to offer tax rebates to industry and other enterprises. Under these circumstances the government as well as other state political parties must evolve a consensus and take a firm common position on the matter.  

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