WFYI logo

Jammu and Kashmir's Distinct Approach to GST Implementation

Jammu and Kashmir's Finance Minister, Hasib Drabu, declared that the Goods and Services Tax (GST) will not be applied to the state in its current form due to its unique taxation powers under Article 370. The state maintains exclusive authority to levy service taxes, a right that Drabu fears would be undermined by the GST Council. Implementing GST without state assembly approval could contradict Jammu and Kashmir's financial autonomy.

📖 1 min read read🏷️ GST Applicability

The Goods and Services Tax (GST) legislation will not be enforced in its current form within Jammu and Kashmir, as stated by the region's Finance Minister, Hasib Drabu. Jammu and Kashmir holds a unique position among Indian states, possessing special taxation powers, including the exclusive authority to impose taxes on services. As Union Finance Minister Arun Jaitley prepared for the final implementation of the GST Bill, Jammu and Kashmir still needed to ratify all four associated bills in its state assembly before the new tax framework could apply.

Drabu expressed concerns that the operationalization of GST and the subsequent establishment of the GST Council as the country's de-facto tax authority might diminish the powers of state legislatures. Should GST be introduced in Kashmir, neither the state's legislature nor its finance minister would retain the ability to unilaterally amend tax laws. This scenario directly conflicts with the financial autonomy that Jammu and Kashmir enjoys under Article 370 of the Constitution.

Further Reading

Frequently Asked Questions

What is GST and how does it work in India?
GST, or Goods and Services Tax, is a comprehensive indirect tax introduced in India in 2017. It replaced multiple cascading taxes levied by the central and state governments. It operates on a destination-based consumption tax principle, meaning the tax is levied at the point of consumption rather than production. It has different slabs like 5%, 12%, 18%, and 28% for various goods and services.
What is Input Tax Credit (ITC) under GST?
Input Tax Credit (ITC) is a mechanism under GST that allows businesses to claim credit for the tax paid on the purchase of goods and services used for business purposes. This credit can then be utilized to offset the GST liability on their outward supplies, thereby avoiding the cascading effect of taxes.
Who is required to register for GST in India?
Businesses engaged in the supply of goods or services are generally required to register for GST if their aggregate turnover exceeds a specified threshold limit in a financial year. The threshold for goods is typically INR 40 lakhs (or INR 20 lakhs for special category states), and for services, it is INR 20 lakhs (or INR 10 lakhs for special category states). Certain businesses, like e-commerce operators or those making inter-state taxable supplies, must register regardless of turnover.
What are the different types of GST in India?
There are four main types of GST in India: CGST (Central Goods and Services Tax) levied by the Central Government, SGST (State Goods and Services Tax) levied by State Governments, IGST (Integrated Goods and Services Tax) levied by the Centre on inter-state supplies and imports, and UTGST (Union Territory Goods and Services Tax) levied by Union Territories instead of SGST.
How does GST impact prices for consumers?
The impact of GST on consumer prices can vary. In theory, by eliminating the cascading effect of multiple taxes, GST aims to make goods and services cheaper. However, the actual impact depends on the GST rates applied to specific products, the efficiency of the supply chain, and how businesses pass on the tax benefits or costs to consumers. Some items might become cheaper, while others could see a price increase.

Share Article

Browse by Topics

Related Articles

Popular Articles