Jammu & Kashmir is likely to be the first State to bring petrol, electricity, liquor and real estate under the Goods and Services Tax (GST) regime.
The Government may make a formal decision in this regard in its next budget for 2017-18 in January.
Since these items are not part of the current GST framework, the state will not have to share the revenues even while it avails of the efficiency associated with this piece of indirect tax reform.
A J&K government official said on condition of anonymity that a high-level panel has been set up to prescribe the modalities.
Once implemented, businesses will be able to benefit from tax rebates which, at present, are not available to them. For example, businesses can offset part of their final tax liability against the state GST (SGST) paid on the electricity consumed or on purchase of real estate for business. It will offer a competitive edge for businesses operating from J&K, incentivizing new businesses in the state.
Select petroleum products, liquor, real estate and electricity were kept out of GST at the final stage of consensus-building during the early days of the Narendra Modi government as part of a ‘give and take’ deal to win the support of states for the historic tax reform.
Jaitley has already promised further simplification of GST by the GST Council in due course. Delivering a lecture at Harvard University on Thursday, he said there was a strong case to bring real estate under GST as the one sector where maximum amount of tax evasion takes place, PTI reported from Washington. The matter will be discussed in the next meeting of the GST Council, to be held on 9 November.
