Union Finance Minister Arun Jaitley on Tuesday urged the Mehbooba Mufti-led Jammu and Kashmir government to clear the State Goods and Services Act before the national implementation of the legislation on July 1.

Jammu and Kashmir is the only state to have not passed the Act yet. Jaitley said failure to implement it would put the public and businesses at a disadvantage and have an “adverse impact” on the economy, The Hindu reported.

Meanwhile, Commerce and Industries Minister Nirmala Sitharaman refuted concerns about rising prices of essential commodities under the new regime. “There is no separate explanation to public and another for traders,” Sitharaman said. “It is all the same. The price of essential commodities will not rise”.

In a letter to the chief minister, Jaitley is believed to have suggested that the state use its special status powers under Article 370 to give its approval without getting clearance from the Assembly, The Times of India reported. The People’s Democratic Party-Bharatiya Janata Party government plans on ending the deadlock in the Assembly before the national rollout, unidentified officials said.

The state will have an all-party meeting to discuss the matter after a special session of the House on June 17 failed to pass the Bill.

Implications for the state

The finance minister warned the state government that an exclusion from the tax regime would translate into higher prices of commodities entering the state as well as an increase in taxes on goods leaving the state.

Jaitley said business owners would not be able to avail of the credit option available under the new tax regime. “GST is a destination-based tax… if the State of Jammu and Kashmir does not join GST on July 1, dealers shall not be able to take credit of the Integrated GST for all purchases,” Jaitley said in his letter to Mufti.

GST updates

  • The Centre has begun accepting registration applications from businesses that are yet to enrol themselves under the Goods and Services Tax Network. Jaitley had said that the government had already registered around 65 lakh taxpayers under the network, The Hindu reported. 
  • Once on the network, businesses can use the common portal to file tax returns and pay taxes.
  • The Centre has also delayed launching a feature under the new tax regime which would make it mandatory for e-commerce stakeholders to deduct tax on payments made to their vendors. 
  • The BJP-led government said that small business that use e-commerce platforms do not have to register themselves on the network right away.
  • The delay gives the e-commerce platforms and vendors more time to comply with the new law’s requirements.

The Centre had turned down requests from the Associated Chambers of Commerce of India and Civil Aviation Ministry to postpone the implementation of the GST rollout.