Jaitley writes to Mehbooba over delay in GST rollout

 Finance Minister Arun Jaitley on Monday warned Jammu and Kashmir Chief Minister Mehbooba Mufti that the state could face a serious situation if it fails to roll out GST on July 1.

This follows serious differences within the ruling coalition that has stalled the launch of the Goods and Services Tax (GST) regime in Jammu and Kashmir.

In a letter to Mehbooba, Jaitley said the delay in rolling out the GST might lead to an increase in prices of goods purchased from other states. Secondly, a hike in the prices of all goods being sold from the state would also have an adverse impact on the domestic industry, he said. This is because the GST is a “destination-based tax”, he added.

If the implementation is delayed, for all the purchases by the state from other states after the date, the dealer shall not be able to take credit of the Integrated Goods and Services Tax (IGST), which shall get embedded into the price of purchased good or service. This will lead to the cascading of tax and increase in the price of the said good or service for the final consumers in J&K.

Similarly, the buyer purchasing from J&K shall not be able to take credit of the local taxes paid to the dealer making the sale. This shall increase his cost of purchase through embedding of such taxes in the price and will put the trade and industry in J&K at a “competitive disadvantage”, he said.