Jaitley urges Mehbooba to roll out GST

The Centre made a last-ditch effort to get Jammu-Kashmir on board to launch goods and services tax from July1, with finance minister Arun Jaitley suggesting that the state government had elbow room to convey its concurrence to join the new regime. At the same time, he cautioned that a failure to launch GST will impact consumers and businesses in the state.

In a letter to J-K CM Mehbooba Mufti, the FM suggested that Article 370 of the Constitution gave the state government power to give its concurrence without getting an explicit approval from the assembly .

Sources said that in the past, the state had given its concurrence around 40 times. But, elected governments have resorted to the use of the provision sparingly .

Besides, with the PDP-BJP government introducing a bill in the legislature, it was tough for the Mehbooba administration to implement GST based on a recommendation by the cabinet, especially when the situation in the state remains fragile.

Sources said the state government expected to break the deadlock over the next few days and hoped to join the GST regime in the first few days of July. After all, as chairman of the empowered committee of state finance ministers, Abdul Rahim Rather, who was finance minister in the National Conference-Congress regime, had actively worked on implementing GST across the country , although he was now flagging concerns related to autonomy of the state.

In his letter to the J-K CM, Jaitley cautioned about the “adverse impact“ if the state did not join GST. One, it will result in a general increase in prices in the state of all goods being purchased from other states. Two, the FM said, there will be a rise in the price of all goods being sold from J-K to other states, which will hit local players.

GST is a destination based tax and to ensure this, an integrated GST will be levied on all supplies during the course of inter-state trade.Under GST, any dealer purchasing these supplies from another state pays IGST to the seller but is able to take credit only in subsequent sales. The FM mentioned that if the state of J-K does not join GST on July 1, 2017, for all purchases made by the state from other states, the dealer will not be able to take credit for IGST payments, which will be added to the price, resulting in cascading of tax and increase in price in the state.

Similarly , for goods or services sold from J-K, the buyer in purchasing state will not be able to take credit for local taxes paid to dealer making the sale, which shall increase his cost of purchase.

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