Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: VAT RATES :: VAT Audit :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: empanelment
 
 
« Service Tax »
 GST on a knife-edge as states act tough
 Parliament Winter Session: Govt keen on proper discussion on GST Bills
 Service Tax revision to make digital content expensive: Here’s how it will impact you
 GST Council may reduce tax slabs in future: CBEC chief
 Govt to waive service tax on card transactions up to Rs 2,000
 Recovery Of Tax Under Model Gst Law
 Income Tax officials hunt for Mumbai’s ‘ghost’ assessee
 GST delay to impact Budget
 If GST not rolled out by Sept, there won't be taxation in country, warns Jaitley
 India’s E-Service Tax Will Add To Foreign Content Providers’ Woes
 GST Council to discuss model laws, tax jurisdiction today

Goods And Services Tax Act Vs State Economy
May, 16th 2015

Indian Constitutional amendment bill to introduce Goods & Services Tax (GST) has been passed in the Lok Saba with two-third Majority. It now needs to be passed in the Rajya Saba with the similar majority and ratification by half of the Indian States to take effect. The bill seeks to insert,inter-alia new Articles 246A & 279A in the Indian Constitution conferring simultaneous power to the Union and the State legislatures to legislate on GST and also creation of a Goods & Services Tax Council, which will be a joint forum of the Centre and the States. This Council would function under the Chairmanship of the Union Finance Minister. With this move decks will be cleared for imposition of GST all over India.

The Intended GST Act will subsume all indirect Central Taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD).At the State level, Taxes like VAT/ Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST. The act intends to do away with the concept of ‘declared goods of special importance’ presently enjoying Constitutional protection. As an incentive to States to veer around the central legislation and to allay their fears of revenue loss, it is proposed that the Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year.

Be that as it may, the imposition of this law poses a fresh challenge to the fiscal autonomy of the J&K State. According to our own constitution, the State is empowered to levy taxes both on goods & services through State’s General Sales Tax Act. Since central GST Act proposes to subsume all these taxes in one central legislation, the State’s power to impose such taxes will vanish and New-Delhi always on prowl to erode our autonomy will be more than eager to seize this opportunity.

Our past experience in such matters has also been bitter. To quote two chief instances- Gift Tax Act, a central legislation to tax Gifts, was not applicable to our State for want of legislative incompetence of Centre to apply this law here. Following its abolition at central level in 1997, the provisions of this act were incorporated in section 56(2) of Income Tax Act 1961 with minor alterations & amendments here & there. Since Income Tax act applies to state, the Gifts made in our State are now taxable via Income Tax Act. In other words, Gift Tax has been made to enter our State through a back door. Kashmir Chamber of Commerce & Industry (KCC&I) apprised the former Prime Minster, Manmohan Singh about this brazen act of injustice & foul play through a memorandum but he brushed aside the matter with a smile.

Similarly ,the previous coalition Govt of National Conference & Congress outsourced the financial responsibilities of J&K Bank to Reserve Bank of India in 2011.To recapitulate the whole matter, Under the constitutional scheme of things , Reserve Bank of India Act, as originally enacted, was not applicable to the State of J&K. This was done only in 1956 when the process of gradual erosion of State autonomy was put in motion by New-Delhi post 1953 coup-de-tat . But the bank’s operations remained limited to a supervisory role of local Banks. J&K Bank practically remained the Reserve Bank of the State looking after its fiscal & financial arrangement.

The first nail in the coffin came in 1973 when the public debt function of the state was taken over by RBI. No tears were shed then as the agenda of New-Delhi was being faithfully carried out by the ruling elite. For opposition, Beg-Parthasarthy talks had just started and the beneficiaries –in-waiting too were not interested in frustrating the process.

The other facet of the financial arrangement ,however continued to remain with the J&K Bank. All Plan & non-plan Funds, tax & non-tax revenue were routed through this bank. The ways & means advance, meant to bridge the mis-match between receipt & payments was also provided by this bank. In more ways than one , the arrangement ,though considerably depleted by the ambush of 1973, was symbolic of uniqueness & financial autonomy enjoyed by the State . And symbolics do matter. In 2010-11, the remaining half of this fiscal autonomy was handed over to New-Delhi by snatching all the powers of J&K Bank to provide ways & means advance to State. The results of this ill fated move are for all of us to see. Today our treasuries are empty & we cannot use our own money deposited with J&K bank to bail us out of the mess. J&K bank has virtually been reduced to the status of an informer of Central Govt. departments like Income Tax Deptt., Enforecement directorate etc. etc. to find who & how much a Kashmiri deposits in his bank account.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions