Rashid Paul

‘Roll out of GST surrendered last vestiges of J&K’s economic autonomy to GoI’

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Experts pick holes in then PDP-BJP regime’s claims, accuse NC of being collaborator in facilitating new tax regime

Srinagar, Jan 13: Goods and Services Tax (GST) rolled out in J&K in July 2017 is proving a mirage of growth having only marked the end of the economic autonomy of the state.

The new indirect tax system has evaded increase in the revenues of the state and has incapacitated economic activity of its people.

Then PDP-BJP political regime’s claim that the new tax regime would enhance economic welfare, has proved mere hoax and it has failed to inflate the tax kitty of the state, reveal statistics.

J&K’s own tax revenue for 2017-18 stood at Rs 9536 crore which went up to Rs 11538 crore in financial year 2018-19.

According to official data, with GST in vogue for the past one-and-half year, State’s total tax revenue (for 2019-20) shall not exceed Rs 12,900 crore including a GST of Rs 8,050 crores.

Despite J&K having been turned in to a consumer state by successive regimes, who lacked vision and courage to better its economic prospects, and that the GST being a destination based tax, there is no substantial increase in its own tax proceeds as was boasted by the regime while financially integrating J&K with the Indian state, economics experts point out.

Instead, they say the economic activity has suffered and indigenous productions have failed to register a substantial growth.

The share of Central taxes to J&K also does not show any significant growth.

In 2017-18, the State had a share of Rs 11,912 crore from Central taxes which went up to Rs 13,229 crore the following year.

Despite the implantation of GST the share of Central taxes to the State shall not exceed Rs 15,000 crore, for the new fiscal, they say.

It is mentionable that then opposition -- National Conference -- did not oppose the passage of the “hideous” GST bill in the Legislative Assembly and had preferred a “symbolic walkout”.

Though GST subsumed many Indirect taxes, State government lost on the revenue from entry tax, toll tax and entertainment tax. The new tax structure was supposed to simplify the indirect tax system, however; the costs to local as well as inter-state buyers have not reduced so far.

“Conducting business has become increasingly difficult in J&K. It only helped in economically uniting the state with India but at the cost of local business and entrepreneurship,” say experts.

“Before the introduction of GST, we had most of our products exempted from tax. But the coalition regime brought almost all the goods and services under the dragnet of GST. It worsened the situation for all of us,” says Shakel Qalander of the Kashmir Centre for Social and Development Studies (KCSDS).

Qalander is aghast at the so low GST revenues despite the surrender of the last remains of State’s economic identity to Government of India. The tax revenues should have increased by at least Rs 8000 to 10,000 crore, he said.

“Being a consumer state and GST as last the destination tax, J&K’s tax returns should have been not less than Rs 20,000 crores. An income of 12,000 crores shows the failure of this new tax regime which is very high and complicated,” says Prof Nisar Ali, former head Department of Economics at Kashmir University.

Prof Ali referred to a 2018 World Bank report calling the Indian GST system among the most complex in the world with not only one of the highest tax rates but also one of the largest number of tax slabs.

Prices of products have only increased with the onset of GST, he added.

Recalling how Mehbooba Mufti-led coalition “gagged and betrayed” the trust of the business community of the state, Dr Mubin Shah, a former president of the Kashmir Chamber of Commerce and Industry said, “We were assured of consultation for drafting the GST legislation before tabling it in the Assembly. But instead I along with my colleagues were detained and bullied and the bill was passed in a dramatic manner.

“We had asked the government to put in their own law and retain the power to levy the tax rates. This would have made us a shopping center of north India and our businesses would have flourished significantly. The government along with the opposition simply acted as collaborators, devastating our business and economy,” said Dr Shah.

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