Given the recent demand for the removal of Article 370, GST reforms when viewed from this prism of suspicion, will look like another nail in the coffin of Article 370

The consensus on the Goods and Services Tax reforms between the Centre and the states in the Empowered Committee of State Finance Ministers has opened the doors for one of the important tax reforms in India.

gst tax GST   Another Nail in the Coffin of Article 370

The GST aims at bringing all the various types of direct and indirect taxes under one roof for uniform and efficient taxation throughout the country. The reforms will do away with various state level taxes like the octroi taxes and integrate the states of India to form a one unified common market. It will give a boost to business sector in the country, especially the manufacturing industry. In the long run it has the potential to earn India more than 15 billion rupees. 

Though every state acknowledged the necessity of the GST tax reforms in the country but the states were averse to the original version of the GST. An agreement was reached on GST reforms only after the government allowed the states to have their own petroleum tax and agreed to offer a compensation for the expected loss that the state would suffer due to the surrender of various exclusive taxations rights.

Whereas for most of the states it was just a question of surrendering certain taxation rights to the centre but for Jammu and Kashmir it is a matter of the constitutional right of financial autonomy. The implementation of GST reforms will seriously undermine the special autonomy that Jammu and Kashmir enjoys by virtue of article 370.

article 370 GST   Another Nail in the Coffin of Article 370

By the powers granted to Jammu and Kashmir by the constitution, the state’s assembly can pass the bills or laws relating to taxation. But if the GST is implemented than neither the J&K State assembly nor State Finance Minister can unilaterally make any changes to taxation in the state. The autonomy to monitor its own taxes will no longer be possible.

One of the special rights that the Jammu and Kashmir state government enjoys is the exclusive right to tax services in the state. It is the only state in the Indian Union to be able to do so. But under the proposed Central Goods and Services Tax regime this special right to tax services will get significantly debilitated.

So along with the right to tax goods, in the case of Jammu & Kashmir, the state government will also be surrendering the special right to tax services. In other words an important feature of J&K’s special status, that is the state’s autonomy in taxation, will get eroded.

The GST reforms can lead to many positives in the country. It will enable further economic integration of India and will result in more efficient taxation. It has been estimated that if GST model of taxation is implemented then it can alone boost the GDP growth of the country by 0.9-1.7 percent. In the long-term it can lead to less inflation, lesser taxes and increased competitiveness of the Indian markets.

While for the rest of India the implementation of GST regime is of vital importance but in the case of Jammu and Kashmir, its utility in regard to the stability and prosperity of the troubled state is not clear. Anything related to Jammu & Kashmir happens to be viewed through the prism of politics given its troubled political status.

The special constitutional status given to Jammu and Kashmir by the article 370 has over the years become a symbol of Kashmiri political and economic freedom. Given the recent demand for the removal of the article 370, everything remotely influencing the Special status of Kashmir will be viewed with suspicion and GST reforms when viewed through the prism of suspicion will look like another nail in the coffin of Article 370.

By: Avinandan Choudhury

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