SRINAGAR: In order to assert its taxing rights, J&K government is contemplating the idea of bringing fuels, electricity, liquor and real estate under the state goods and services tax (SGST), business newspaper Mint reported. The announcements will be part of the next budget being presented in January in Jammu.
All these items are outside the purview of the GST, right now. The newspaper has said the idea, once in place, could be a model worth copying by other states.
The resources that could be mobilized by brining these areas under SGST will help the state to make a bit more and not share it with the centre as is the case with almost every GST earning.
“A J&K government official said on condition of anonymity that a high-level panel has been set up to prescribe the modalities,” the newspaper said. “Once implemented, businesses will be able to benefit from tax rebates which, at present, are not available to them. For example, businesses can offset part of their final tax liability against the state GST (SGST) paid on the electricity consumed or on purchase of real estate for business. It will offer a competitive edge for businesses operating from J&K, incentivizing new businesses in the state.”
The penal would examine the pros and cons of this initiative in wake of the fact that the GST system in vogue is a dual structure with state and centre parts almost equal. “If SGST and CGST rates are unequal, it could pose challenges in settling taxes on inter-state trade. The J&K government’s panel will look into all implementation issues,” the newspaper said.
Given the fact that GST council is supposed to compensate the states in case of any revenue losses by the new system for the next five years, J&K has the flexibility of experimenting things to create a difference. J&K is the only state in India that has a separate constitution with the taxing system, by and large a state subject.
While the petro product including in SGST cold make petroleum slightly cheaper in the state, the new idea can stabilize the real estate sector by doing away with the stamp duty and replace it with the SGST. Kashmir’s otherwise booming real estate sector has witnessed massive stagnation after the GST and demonetization.
Official sources in Srinagar said the exclusivity of J&K in Indian federation permits the state to have end number of systems that will make a better trading and investment space.