GST puts cross-LoC trade under double taxation


Failure of Jammu and Kashmir government to bring barter trade carried between divided parts of Kashmir under zero taxation in Goods and Services Tax regime has resulted in levying of double taxation on intra-Kashmir trade thus impacting the trade which was started as Confidence Building Measure between India and Pakistan.

Officials inform that pre-GST, JK government had exempted taxation on export of materials/items to PaK in order to give impetus to this trade. However post GST, now traders have to pay double taxation i.e. on goods exported to PaK and imported from Muzaffarabad.

President, Salamabad-Chakote Trade, Hilal Turki while explaining that repercussions of GST on intra-Kashmir, said that “material imported from outside Kashmir is first taxed at Lakhanpur and once it is sent to other side, we receive goods in return which are again taxed at the point of sale outside or within state.”

“ As a result of double taxation, traders are shying away from trading,” he said adding that they have taken up the issue with Chief Minister, Mehbooba Mufti and Governor NN Vohra who have assured of resolving our issues.

Turki said that because of the double taxation, the trade has been hampered to a large extent.

 A senior commercial tax official said that they have asked to work on modalities for the intra-Kashmir trade under GST.

“Earlier the goods exported under intra-Kashmir trade were exempted from taxation, while on imported goods the tax levied ranged from 2 to 5 percent,” he said adding that they will soon come out with a modalities viz-a-viz cross Loc trade.

Commissioner Secretary, Industries and Commerce, Shailendar Kumar said that he will examine the issue.

On October 2008, India and Pakistan announced commencement of intra-Kashmir trade between divided parts of Jammu and Kashmir as a confidence building measure.

Nine years down the line, the trade has been reduced to mere ‘symbolic gesture’ thanks to politics of acrimony between the two countries.

The cross-LoC trade, which began in 2008 through Salamabad in Uri and Chakan-da-Bagh in Poonch district with two trade facilitation centres, was an important CBM, with Kashmir’s business community hoping to use these routes for transit trade and alternative to Srinagar-Jammu highway which is the only road link connecting Kashmir to the rest of the world.

As per the information gathered by Greater Kashmir, in the beginning of the trade there were around 600 traders who registered with Industries department in order to do business with their counterparts on other side of Kashmir. But now the number of active traders has come down to just 65.

Encouraged by the potential of this trade, the Joint Chamber, in a representation to the Foreign Office ahead of the Working Group meeting, had suggested that traders should be allowed to move across the LoC on a ‘trade pass’ to facilitate smooth trade and recovery of sales proceeds from both sides.

The Joint Chamber had proposed a multiple-entry pass valid for two years issued on its recommendation and that of other recognized chambers on both sides.

Other demands included banking facilities and expanding the trade list to cover all items manufactured or produced in the two parts of Kashmir, doubling the number of trading days, allowing trucks carrying cross-LoC trade goods to their final destinations, and opening additional routes of Chumb-Pallanwala on the Bhimer-Jammu side and Khoiratta-Noshehra on the Kotli-Rajauri side as these are the shortest and most viable routes for cross-LoC trade.


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