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J&K keen to include realty, power in State’s GST law

In what could have vastly expanded the ambit of the Goods and Services Tax (GST) significantly, Jammu and Kashmir was keen to include real estate and power within the new tax levy in its own State.

“It was not a concrete proposal but a thinking that can we as a State set the trend by including sectors such as power and real estate in our own SGST law?” said Haseeb Drabu, Finance Minister of Jammu and Kashmir.

Chief Economic Adviser Arvind Subramanian had also suggested including real estate in GST is critical to take forward the war against black money.

Earlier, a similar pitch was also made by Delhi Deputy Chief Minister Manish Sisodia to include land and real estate under GST. But while J&K has to draft its own law, Delhi has to follow the model SGST Bill approved by the GST Council.

Drabu is understood to have put forth the proposal in the GST Council meeting in March to have a more “ambitious SGST law for the State”, but it did not meet much success. According to the minutes of the meeting, accessed by BusinessLine, he was informed that “this would not be feasible as a separate dispensation on real estate or power sector in the SGST Act of Jammu and Kashmir would create problem in operation of the Integrated GST Act”.

Autonomous status

Jammu and Kashmir enjoys autonomous status under the Constitution of India and has to draft its own GST law as the CGST and IGST Acts do not apply to it.

While all States will enact their SGST Act through Article 246A (1) of the Constitution of India, Jammu and Kashmir will levy the tax by exercising the enabling power under Section 5 of the Constitution of the State of Jammu and Kashmir.

Pointing out that the current model of GST is diluted, Drabu said, “We wondered whether States can try to improve the design of GST at their level.”

He pointed out that the State has been a pioneer of sorts in many economic reforms such as removing the distinction of Plan and Non-Plan expenditure.

State Budget

In the State Budget for 2017-18, he also announced a move towards Universal Basic Income for citizens below poverty line and Budgeting changes such as the new Public Management System.

“We are testing these ideas and our proposal on GST was also in the same direction,” Drabu said.

The State will host the next round of the GST Council discussions at Srinagar on May 18 and 19. Drabu said the State plans to roll out GST along with the rest of the country. “We have to take approval from our Assembly and we will call a session soon,” he said, stressing that GST has to be rolled out simultaneously as the State’s traders and businesses will otherwise find it difficult to do business with the rest of the country.

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