by Sobiya Manzoor Pullo
For the region’s artisans, fruit traders and small vendors who form the backbone of the local economy, GST compliance should not be seen as a burden but as a gateway to growth, formation, and national integration.
Walk through the lanes of Srinagar, Ganderbal or Budgam and one finds hands weaving stories into Pashmina shawls, chiselling motifs into copperware, or moulding vibrant papier-mâché creations. These crafts, centuries old and culturally rich, form the heartbeat of Kashmir’s local economy. Yet the hands behind them remain untouched by the benefits of the Goods and Services Tax (GST), either unaware of its provisions or daunted by its digital complexity.
The introduction of GST marked a turning point in India’s economic governance. Designed to unify the country’s complex web of indirect taxes into a single, comprehensive framework, it promised simplicity, transparency, and efficiency. For the Union Territory of Jammu and Kashmir, however, the transition to GST has not been seamless. While the legislative framework is in place, compliance on the ground remains an uneven terrain shaped by limited awareness, digital challenges, infrastructural constraints, and a distinct socio-economic fabric.
When Jammu and Kashmir joined the GST regime in July 2017, reluctantly and as the last among Indian states, and following the reorganisation of the state into a Union Territory in August 2019, GST began to apply fully under the Central and Union Territory Acts. Yet five years later, the region still struggles to bridge the gap between the policy’s promise and its implementation in everyday business life.
Informal Economy and GST Challenges
The need for GST compliance is particularly crucial in Jammu and Kashmir, where a significant portion of the economy is informal and livelihoods revolve around micro-enterprises, handicrafts, tourism, and seasonal trading. Paper mâché artisans in downtown Srinagar, Pashmina weavers in Ganderbal, and carpet makers in Budgam mostly operate as unregistered small units or cooperatives. These artisans, while representing the cultural soul of the valley, remain largely unaware of how GST could support them if adopted correctly.
The same holds for fruit growers in Sopore and Shopian or dry fruit traders in Kargil, who frequently sell produce through informal channels and avoid registration out of fear of procedural hurdles.
One of the most critical aspects of GST compliance is the timely filing of returns. In Jammu and Kashmir, thousands of registered businesses either skip filing returns altogether or do so irregularly. Many shopkeepers and traders, particularly in rural areas such as Kupwara, Handwara and Doda, are not aware that failing to file monthly or quarterly returns like GSTR-1, GSTR-3B or GSTR-9 not only attracts penalties and interest but also blocks their ability to claim Input Tax Credit (ITC).
Filing GST returns is not a mere legal formality. It is the gateway to accessing refunds and ensuring that taxes are not paid multiple times across the supply chain.
The Mystery of Input Tax Credit
The concept of Input Tax Credit (ITC) remains unclear to many business owners in Jammu and Kashmir. ITC allows businesses to reduce their tax liability by claiming credit for GST paid on purchases and inputs. For example, a trader buying inventory from Delhi and paying 18 per cent GST on the invoice can claim that tax back while selling the goods locally. However, this benefit is available only if the trader files returns regularly and matches purchase invoices.
In the absence of proper record keeping and awareness, many eligible businesses in the Union Territory fail to claim ITC, inflating their costs and reducing competitiveness.
Misuse and Digital Barriers
While many genuine businesses fail to claim or even understand ITC, others increasingly misuse it. Filing GST returns requires more than internet access. It demands awareness, guidance, and digital literacy. The common person in Kashmir, whether a loan baker in Islamabad or a shawl weaver in Ganderbal, lacks all three.
The government has introduced mechanisms like the Quarterly Return Monthly Payment scheme for small taxpayers and tools such as GSTR-2B to simplify ITC claims. Yet when a small trader barely understands what a return is, expecting them to manage reconciliation of input tax credit or grasp reverse charge mechanisms remains detached from reality.
A Game Changer Left Unused
Input Tax Credit forms the backbone of GST, offering businesses a way to reduce tax liability by claiming credit for taxes already paid on purchases. For small and medium enterprises, this could be transformative. But what use is a transformative tool when one does not know its existence?
Many local businesses in Jammu and Kashmir fail to claim ITC simply because they are unaware of its existence or lack professional help to do so. In some cases, individuals purchase expensive consumer items such as luxury cars, iPhones, or MacBooks under their business name, even when intended for personal use. These items are then shown as business expenditure, and GST paid on them is fraudulently claimed as Input Tax Credit. This creates a chasm between those who can claim the benefit and those who struggle to understand it.
The issue of awareness is compounded by infrastructural and legal challenges. While GST is designed as a digital-first system, large parts of Jammu and Kashmir still suffer from poor internet connectivity, particularly in rural areas and conflict-prone zones. This severely affects small vendors and artisans who may not have access to digital infrastructure or professional tax advisers.
For instance, a papier-mâché seller at Lal Chowk or a street vendor in Rajouri finds it daunting to generate e-way bills or navigate the GST Network portal without assistance from a Suvidha Kendra or facilitation centre.
Lack of Grassroots Efforts
Despite the critical importance of GST compliance, meaningful efforts from both the Central and Union Territory governments remain absent. A few workshops have been conducted in collaboration with trade bodies, but they remain sporadic and insufficient in scale or impact. Initiatives such as the QRMP scheme for small taxpayers and auto-generated forms like GSTR-2B, along with the e-invoicing system, have been introduced. Still, there has been little attempt to publicise or explain these tools to the wider public.
As a result, such reforms remain largely inaccessible to both the shawl seller in Baramulla and the kirana shop owner in Udhampur, who continue to operate in the dark. Without a sustained multilingual outreach strategy tailored to local business realities, the gap between policy and public awareness widens.
Both the Union and Union Territory administrations have failed to launch sustained grassroots awareness drives. There are no multilingual manuals tailored for regional traders, no village-level GST clinics, and no real-time grievance redressal platforms that work in local dialects. The reform that promised inclusivity has, paradoxically, left many behind.
Several steps are urgently needed. First, the government must invest in localised awareness campaigns, particularly through community outreach programmes in regional languages such as Kashmiri, Dogri and Ladakhi. Second, every district should be equipped with a fully functional GST Suvidha Kendra, staffed by trained personnel who can assist with registration, return filing, ITC claims and legal queries. Third, sector-specific GST clarifications should be issued, especially for traditional industries like handicrafts, apple trading and tourism, which have unique transaction models and often fall into grey areas under GST law.
Policy Without Empathy
While GST is structurally sound and policy-driven, its success in Jammu and Kashmir depends on inclusivity, handholding, and contextual application. The law must not only be made known but also approachable.
For the region’s artisans, fruit traders and small vendors who form the backbone of the local economy, GST compliance should not be seen as a burden but as a gateway to growth, formation, and national integration. Only then can the promise of GST be realised in the heart of the Himalayas.
Beyond balance sheets and invoices, there are lives. A copperware seller in downtown Srinagar struggles to understand e-way bills. A pheran maker in Shopian is forced to rely on a cousin in Delhi to file returns. A dry fruit vendor in Sopore has his GSTIN suspended for non-filing, not by fraud or forgetfulness but by fear of a system he does not understand.
They are not defaulters. They are disenfranchised.
They are not avoiding tax. They are avoiding humiliation.
This human cost of a policy implemented without empathy is one of the greatest taxes Kashmiris pay today.
(The writer is a research scholar and a senior associate at the Delhi High Court. Ideas are personal.)
