The Goods and Services Tax (GST) bill was on Wednesday approved by the Jammu and Kashmir Cabinet which decided to call a special session of the state assembly expectedly from June 17 for enactment of the new indirect tax law. Since the GST bill passed by Parliament cannot be applicable to Jammu and Kashmir in its present form, the state government has brought a modified version of the legislation, Finance Minister Haseeb Drabu told reporters here after the Cabinet meeting chaired by Chief Minister Mehbooba Mufti.
The version brought by the state government will neither infringe upon the special status of Jammu and Kashmir under Article 370 of the Constitution nor compromise the special taxation powers enjoyed by it, he said. “The Cabinet today approved the draft legislation of GST and desired that we should hold a special session of the assembly starting, perhaps from the 17th (of June) to discuss the specific issue of extension of the GST to the state of Jammu and Kashmir,” Drabu said.
“While all other states draw their power to tax under Article 246 of Consitution of India, we draw our powers from Section 5 of Constitution of Jammu and Kashmir. There is no amendment required in consitution of J&K. Neither does it infringe upon Article 370, nor the powers to impose tax under section 5 of J&K Constitution is compromised,” the finance minister said.
He said the Cabinet also decided that the experience of how the GST functioned in the state would be reviewed after five years. Drabu said according to his estimates, the state will witness an increase of Rs 1500 crore to Rs 1600 crore in tax collections in addition to the devolution from the Centre.
The new tax regime will be beneficial for a consumer state like Jammu and Kashmir, he said. “No business can operate profitably if the GST is not implemented as there will be double taxation,” he said.
Drabu said while there were no exemptions under the GST, the businesses in Jammu and Kashmir and northeast will continue to enjoy these benefits in the shape of reimbursements. Asked if the July 1 timeline for rolling out the new tax regime can be met, the state finance minister said he is confident of it.
“There were apprehensions earlier about the IT preparedness for implementation of the GST but the GST Network which looks after this aspect has assured that they are ready,” he said.
Drabu said Jammu and Kashmir was lagging a “little” in IT aspect as “we did not want to pre-empt” the legislative part by doing so. In response to another question, he said West Bengal had not opposed the GST formally during the recent meeting of the GST Council.