Post GST, J&K’s own tax collection drops by Rs 1,300 crore since July 2017

Centre compensation to cover state’s revenue loss

Srinagar, Publish Date: Aug 16 2018 12:08AM | Updated Date: Aug 16 2018 12:08AM
Post GST, J&K’s own tax collection drops by Rs 1,300 crore since July 2017Representational Pic

As the GST took away Jammu and Kashmir’s exclusive power to tax good and services, state’s own tax collection has witnessed a dip by over Rs 1300 crore since July 8, 2017 - the day on which GST was extended to J&K.

A senior commercial taxes department official said, “Revenue realisation in states witnessed dip as many of the state taxes are subsumed under Goods and Services Tax. J&K is facing the same situation, besides being import driven economy our revenue losses under GST are among highest in the country post implementation of new tax regime.”

According to official figures, the revenue losses post implementation of GST submitted by the state government before centre for compensation stands at 1307 crore from July 8, 2017. 

However, the official added that as per provisions in Section 7 of the GST (Compensation to States) Act, 2017, loss of revenue to the states on account of implementation of Goods and Services Tax during the transition period would be compensated by the central government. He said the compensation payable to a state is supposed to be provisionally calculated and released at the end of every two months during transition period of five years.

According to data of union finance ministry, Jammu and Kashmir is one among the states that suffered losses in various sectors due to implementation of GST in the state.

The GST compensation for Jammu and Kashmir since July 2017 has jumped to Rs 1307 crore, surpassing the states like Andhra Pradesh, Arunachal Pradesh, and Tamil Nadu.

Jammu and Kashmir was the last state to implement GST rollout on July 8. The Jammu and Kashmir Goods and Services Tax Bill 2017 was adopted by a voice vote in the absence of opposition parties which accused the PDP-BJP government of undermining the special status of the state.

The bill was moved in the Assembly after a Presidential Order which gave an assurance on preservation of the special status of the state guaranteed by Article 370 of the Constitution.

Meanwhile business community in Kashmir are up in arms against the implementation of GST stating that the new tax regime has taken away state’s fiscal autonomy at that time caused business slump.

“Our opposition to GST was that it would take away our financial autonomy and make us more dependent on centre. Both our apprehensions have proven right after a year of its implementation,” said chairman Kashmir Economic Alliance, Muhammad Yaseen Khan.

He said that extending GST was a well-thought out plan to make us financial dependent. “PDP government played an active role in erosion of fiscal autonomy. Business leaders were jailed to appease New Delhi and in return PDP was dislodged unceremoniously. But all said and done, our state economy is passing through turbulent times due to GST implementation and revenue losses  to government will increase in coming days despite higher tax rates because trade volume has gone down post GST.”

Chairman Kashmir Economic Forum, Showkat Chowdhary opines that erosion of fiscal autonomy has pushed Kashmiri’s businesses to the wall.

“Earlier state had power to tax services and goods, but now it has surrendered it to the central government which makes state economy fragile and dependent on the centre funds. And we have seen in the past how centre uses funds for political manoeuvring,” he said adding that dip in Rs 1300 crore state tax collection is an eye-opener for those who were advocating implementation of GST.

Chairman PHD’s state committee of FMCG and taxes, Jan Muhammad Koul said “We had warned then finance minister about revenue losses state would face, but he and his government were so adamant to implement it that they jailed business leaders and passed resolution to implement GST.”

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