As the July 1 rollout date neared, Jammu and Kashmir’s Finance Minister Haseeb Drabu on Wednesday said that the government will take a final call on implementation of the GST tomorrow after a meeting of the all-party consultative group.
Jammu and Kashmir is the only state which has not taken a call yet on the implementation of the new tax regime which will come into force in rest of the country from July 1.
Drabu said the Mehbooba Mufti government is “genuinely interested” in building a consensus because the GST is a regime that would last for the next 30-40 years.
The all-party consultative group, headed by PDP MP and former Deputy Chief Minister Muzaffar Hussain Beg, was constituted by the government after an all-party meet failed to evolve a consensus over the issue.
“We will take a final call on the GST implementation tomorrow once we get the full sense of the all-party meeting. I do not want to preempt anybody. Let us understand what their views are,” Drabu told reporters here.
The meeting is scheduled tomorrow at 4 pm.
“May be there is something (which) I have not seen, may be they come up with a wonderful solution which meets all requirements and makes all of us happy,” he added.
Union Finance Minister Arun Jaitley had on Monday written a letter to Chief Minister Mehbooba Mufti, saying that failure of the state to implement the GST would lead to “adverse impact” of price rise and put the local industry at a disadvantage.
Drabu said the state government has reached out to the opposition parties of the state and sent them all the relevant documents.
He said a perception has been created that the GST would impact the special status and the fiscal autonomy of the state, but there is no compromise on Article 370.
“The government is trying to build a consensus. This is a very fragile society. We are going through difficult times.... the way things are happening around us, the way things have been dehumanized, anything can spark off. You do not want to create social chaos.
“So, it is in the interest of the society of J&K, not just the economy, to build a certain political as well as legislative consensus,” he said.
Noting that the GST would have implications on consumers, traders, businesses, government, civil servants and banks, the finance minister said many amendments were implemented here but nobody knew anything.
“We decided that we will go to the people, we will discuss it inside the assembly, outside it. It is not for the lack of trying,” he said.
The last meeting of the consultative group was boycotted (by National Conference and Congress), Drabu said, adding “but we still tried.”
He said the chief minister had asked him to make another attempt and keep trying.
Drabu said GST is the superior version of VAT and is beneficial for the consumers.
“The biggest beneficiary of the system of the GST is the consumer. The first most important thing is that it is a very transparent system,” he said.
Second benefit is to the manufacturer as he will pay only for the value-added amount, he said.
Expecting the rates to become cheaper, he quickly added, “I am not saying that the rates will become cheaper from July 2. It will take up to eight months.”
In the GST council, he said, “we have decreased rates of about 11,000 commodities out of about 12,000.”
Drabu said the rates will become cheaper and the states will face the revenue loss of about Rs 1.40 lakh crore by implementation of the GST.
Consumer states like J&K, north-east and Himachal Pradesh will benefit, while the producer states like Gujarat, Maharashtra, Tamil Nadu and Karnataka will face losses, he said.
He said the GST would also lead to decrease in corruption because cash transactions will decrease.
“Then, the tax harassment, through tax officials, will stop as it is a system based on self-assessment,” he added.
The finance minister said “while there would be chaos for some time” after the implementation of the GST, the new tax regime would give impetus to the businesses to grow.
“There will be confusion for first three to five months, there will be chaos like the way it happened at the time of demonetization. I call this a disruptive policy change in which there will be some disruptions, but the gains are much higher,” he said.
For J&K, those with a turnover of lower than Rs 20 lakh will not have to fill returns. Those with lower turnover than Rs 75 lakh, they will have to fill in one single form, “The intent is that the businesses must grow,” he added.
“There is no violation of special position. There are enough safeguards to not only protect our special status, but also our constitution,” he said.
Drabu said the state would face huge losses if the GST is not implemented in the state.
“If the GST is not implemented, then you cannot trade. No trader can bring goods here when there is no GST number. Can we live as an isolated economy? We will not be able to have basic items here. There will be huge shortages. Then, we cannot export items like apples, walnut and cherry,” he said.
“The worst sufferers of the non-implementation of GST will not be the government, but the consumers, traders and the business. There will be smuggling of goods,” he said.