Finance minister Arun Jaitley on Monday urged Jammu and Kashmir chief minister Mehbooba Mufti to pass the State Goods and Services Tax (SGST) Act for the nationwide rollout of the new indirect tax regime from July 1, and to avoid putting consumers and businesses in the state at disadvantage. J&K remains the only state that is yet to pass the Act in the assembly. Jaitley pointed out that if J&K remains out GST, it would lead to increase in prices of commodities coming from outside the state. Further, it would also lead to a spike in the price of all goods being sold from the J&K to other states, impacting the domestic industry adversely.
“Under GST, any dealer of goods or service purchasing such supplies from any other state pays integrated GST to the seller but will be able to take credit of the tax so paid in subsequent sales,” Jaitley said in the letter. Additionally, he mentioned that the dealers based in the state would not be able to avail the credit of IGST if the state remained outside the purview of GST. The inability to offset final tax liability against IGST credit would lead to cascading of tax and increase in price of the said good or service for the final consumers in the state.
Similarly, buyers in other states purchasing from J&K will not be able to take credit of the local taxes paid to dealer making the sale, which will increase the cost of purchase through embedding of such taxes in the price. This will put the trade and industry in the state at a competitive disadvantage, the letter further said.
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According to the Constitutional norm, Jaitley urged the chief minister to send the concurrence of the state, with any modifications as considered necessary keeping in view the special Constitutional position of the state, on the Constitution (One Hundred and First Amendment) Act, 2016 for the order of the President.