One of the most popular leaders of the world today, India’s Prime Minister Narendra Modi has yet again, done something that has never been done before in the history of the country.
With the support of his Finance Ministry led by Arun Jaitely, Modi has made sure that the Goods and Services Tax (GST) gets applied to each and every state of the country, without any exception. The word exception here is in particular reference to the northern most Indian state of Jammu and Kashmir which is governed by the Article 370 of the Indian Constitution which grants a special autonomous status to the state.
Though a little late, but the government of Jammu and Kashmir decided to join the rest of the country in implementing the revolutionary GST, on July 6. This makes the state stand at par with others in competition in trade and industry.
However, the adoption of GST by the legislative assembly of Jammu and Kashmir is a big victory pertaining to the management of the state of Jammu and Kashmir for the Modi-led BJP government, making “one tax” across the entire country a reality. Apart from being a win with respect to the state, it is a huge win for the government with regard to the entire country, too!
The Central Government ensured that Jammu and Kashmir remains actively involved in all proceedings pertaining to the new tax. However, it was Arun Jaitley’s letter ahead of the implementation of GST on July 1 highlighting the repercussions of not joining the GST wagon that set out a quick action by the state government.
In his letter, Jaitley mentioned that if Jammu and Kashmir fails to implement GST, all the goods that the state purchases from other states will be priced higher, and similarly, prices for all the goods being sold from Jammu and Kashmir will also increase, both of which can pose a negative impact on the state’s economy.
A large part of the credit also goes to Mehbooba Mufti Sayeed, chief minister of Jammu and Kashmir, who played a significant role in the passage of the groundbreaking tax reform in a special session of the state assembly.
The implementation of GST will not impact the special status of Jammu and Kashmir in any manner, but opposition parties and other outfits in the state might use it as a rallying point.
As also mentioned above, the state of Jammu and Kashmir enjoys a special autonomous status as per Article 370 of the Indian Constitution. Therefore, none of the taxes implemented in other parts of the country have been applied to Jammu and Kashmir until now.
Even the Service Tax that was implemented in the rest of the country in 1994 is still not applicable to Jammu and Kashmir. For whatever services the state provides, it levies its own tax. However, the Parliament of India has the right to form and implement laws pertaining to external affairs, defense and communication-related issues in the state.
Nonetheless, the state government still has the power to bring GST into effect by passing bills in the state assembly. Therefore, after a special sitting of 4 days in the Jammu and Kashmir assembly, the implementation of the GST in the state was discussed, though amidst a lot of chaos. The house finally passed the bill on Wednesday with state government calling it a substantial victory for the people of Jammu and Kashmir.
The cabinet will now send a recommendation to the state’s governor for implementation of the new tax regime in the state from July 6 after which it will be sent to the President for orders. And that is how the Prime Minister and his government’s dream of one nation one tax will finally be fulfilled.