GST: No question of compromising fiscal autonomy: Drabu tells trade

SRINAGAR: Assuring trade and manufacturing sector that their interests will be fully protected, J&K’s Finance minister, Dr Haseeb Drabu said the state government will not compromise the fiscal autonomy of J&K under the new GST regime.  He had a prolonged meeting with the leaders of the trade, services sector and manufacturers to address the concerns that emerged on the issue in the last few weeks.

“We have made changes in federal relations with the Government of India. Other states draw powers to tax from the Constitution of India while we draw our powers from our own Constitution,” Dr Drabu said. “Those legislative powers have not been compromised, so there is no question of compromising fiscal autonomy.”

The Finance Minister said it is for the first time in J&K’s history that a Constitutional Amendment required to extend a Central law to the State will be debated in the State Assembly. “People of J&K must understand what is at stake, which is why we are holding a special assembly session,” he said.

Dr Drabu said the State Government has set precedent of discussing policy issues with stakeholders and in the assembly where people sent their leaders to take decisions which impact their lives.

“Article 370 is safe and modalities are safe,” Dr Drabu insisted. “You should recognize that we are setting a precedent. If anything it is my understanding that the union is sharing sovereignty with the states, in the taxation space.”

“We can defer the GST implementation but it will impact the business of J&K more than the government. In the absence of GST in J&K, no one would want to trade with us. And if they do trade, the consumer will be penalised through double taxation. Let me assure you that no one will be put to a disadvantage under the GST regime. In fact, J&K will be the first state to do GST refund for shoppers on handicrafts.”

“GST as a system is running successfully in 198 countries. Let me assure you that there can be no better system for traders than GST. Besides, the system of exemptions will also continue in J&K. Modalities will be worked out in coming days  as there is uncertainty all across India and J&K is not unique to it over internet and other operational issues which will have to be resolved,” Dr Drabu said.

The Finance Minister said businesses of Jammu and Kashmir will be affected if GST is not extended to the State, “It is a federal tax where J&K will be a participant. In absence of GST, there will be two taxes which will hike the costs and impact the consumers. Trade will be hampered and no one will be willing to do business in J&K,” he said.

Dr Drabu said the implementation of GST is being discussed since 2002 and the law has evolved over the years. “Earlier, GST was supposed to be a single rate, single tax with no GST Council. Today, not one decision has been taken without the consultation of other states which is why I have repeatedly said that GST council is India’s first truly federal institution,” he said.

The Finance Minister said the GST will ease the businesses as inspection audits will fade away and assessments will be done by traders. “States have huge power today. Our government has done nothing in the Constitutional Amendment which takes away the legislative powers of J&K,” he said.

The meeting was also attended by Commissioner Secretary Finance, Navin K Chaudhary, Commissioner, Sales Tax, Kashmir, Pervaiz Khateeb, representatives of business chambers of Jammu and Kashmir regions, Kashmir Traders and Manufacturers Federation, Kashmir Traders and Manufacturers Association, Kashmir Restaurant Owners Federation, Hoteliers and other business leaders of the state.

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