J&K’s autonomy & GST

Special status of the state will get further diluted once the standard regime for collection of taxes by the centre comes into operation

Political wrangling over implementation of the standard Goods and Services Tax (GST) as a uniform regime in whole of the country will continue to be there for the next few months with Congress, which is the main opposition party opposing it in its present form. The NDA-government has made an attempt to take Congress on board for introduction and passage of the GST Bill sometime in the budget session of the Parliament because the NDA government does not enjoy majority in the Rajya Sabha required for passage of the Bill. The Union Finance Minister Arun Jaitley has hinted that the GST rate will be somewhere between 17 and 18 percent as recommended by an expert headed by the Chief Economic Advisor Arvind Subramanian across all the states of India. Besides this, it is a welcome sign that Jaitley also hinted at meeting the demand of the Congress to have dispute resolution mechanism within the proposed GST Council comprising central and state finance ministers to the extent that Council could decide the modalities of dispute resolution but not actually adjudicate. Besides this, there are problems so far as implementation of the GST regime is concerned for the states which have raised objections on the plea that a mechanism should be in place for sharing the revenues from the central pool. There are several states which have been seeking an extended period of grants for their share from the revenue in the central pool because they want their financial autonomy to be maintained till a final resolution of the issue is reached between the central and the states. Jaitley has also hinted at reaching a resolution with the opposition parties in the Parliament because the centre does not miss out on the deadline fixed at April 26 next year for implementation of the standard GST regime in the country. For the same reasons, the centre is also holding negotiations with states for settling many outstanding issues that have remained unaddressed so far.

Jammu and Kashmir is one of the states which will be affected hard so far as local revenue collection is concerned because of the reason that it has its own constitution and has powers to increase or decrease taxes on any commodity as per the suitability of its own people. It will lose its autonomy to legislate on taxation issues which has been enjoyed till date for collecting their revenues to meet developmental needs at the local level. Apart from this, no many voices have been raised by the people and those n the corridors of powers against the uniform GST regime which will deprive J&K of legislation and collection of revenue for its needs at the state level. Moreover, J&K is yet to finalise any mechanism with the central government for having a share in the revenue collected by the centre after standard GST comes into force from April, next year. The centre has already hinted at allowing larger share to the states like J&K for at least five years in the form of grants so that their local revenue collections do not suffer on this account. But the main question of autonomy of J&K will be a challenge for the present PDP-BJP coalition government how it resolves the issue when it is ceding its autonomy to the centre so far as taxation laws are concerned. J&K will also be losing powers granted by virtue of its separate constitution for collection of other taxes which were different from the centre. Since J&K has already ceded its powers to the centre over Income Tax, Central Sales Tax and Central Excise collections from the state and then ask for devolution of its share from the central pool for financing its developmental and other needs. But still it will be big question how J&K and powers that be will address the question of its ceding its autonomy to the central government when it has been seeking more financial and political autonomy that has been diluted over the past many decades in one way or the other.


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