Fayaz Bukhari
SRINAGAR, May 18: The Centre today ruled out any dialogue with separatists in Jammu and Kashmir in near future, saying its priority was to improve the situation in the Valley first.
“Our priority is to improve the situation first,” Minister for Defence and Finance Arun Jaitley told reporters here when asked if the Centre had any plans to hold talks with separatist groups like Hurriyat Conference in view of the demand repeatedly made by the BJP’s alliance partner, the PDP.
Jaitley, who was here for a meeting on Goods and Services Tax (GST), was also asked by a reporter whether there was a possibility of replacing Mehbooba Mufti as Chief Minister by a BJP nominee in view of the deteriorating security situation.
“I have not heard of any such thing. I am not aware of this thing,” the senior Union Minister replied.
Jaitley, who in his capacity as Defence Minister reviewed the security situation in Kashmir yesterday, said it was not as bad as the impression was being given by some media outlets.
The situation in the valley is improving, he said.
“Well, I can only say this that I had a detailed meeting with Chief of Army Staff (Gen Bipin Rawat) and all the senior officers of the Army last night. The Defence Secretary designate was also with me.
“The Army’s principal job is to look after the Line of Control (LoC) and also some conflict management which is required. In both the areas, the Army is fully confident of dealing with the situation,” he said.
Refusing to divulge details, the Defence Minister said, “Military strategies are not disclosed or discussed in public. We must all have good faith in the capacity of the Army. And whatever effective steps are required, both on the LoC and to ensure normalcy within the state will be taken.”
In response to a question, he said, “It is obvious that there are certain categories of foreign infiltrated terrorists”.
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Asked what message was being conveyed by holding GST Council meeting here, Jaitley evaded a direct reply but maintained that the situation in the valley had improved.
“Look, the invitation from Srinagar (for holding the meeting) was pending for long now. Ministers and officials from all parts of the country have come here. A lot of improvement in the situation was witnessed.
“All people, who have come here, before their arrival, a notion was created by electronic media… That has changed drastically. People are freely moving around. In fact, they have been moving since yesterday, and are moving around again after the meeting. Some are even staying back after the meeting,” he said.
To a question about GST eroding the taxation autonomy of Jammu and Kashmir, Jaitley said, “it is for the state of Jammu and Kashmir and assembly to decide what they want to do and I am sure that the state will take an appropriate decision.”
He, however, said it was “clear to any person who understands the taxation system that both the State Government and the consumers will hugely be benefitted” by integrating taxes with the GST.
“Jammu and Kashmir is not a producing state. It is a consuming state. GST is a consumption-based tax. So the tax which is not here in Jammu and Kashmir for production, the tax will be given on consumption,” Jaitley said.
He said with the implementation of the GST, the tax revenue of Jammu and Kashmir will significantly increase like other consumption states.
By not integrating with the GST, the consumers in Jammu and Kashmir will have to pay higher prices for products.
“The consumers will get credit for input only if the state is integrated with the GST. Otherwise, they will pay taxes both for input as well as the final product.
“Anyone saying don’t implement GST is basically saying that the consumer from my state should buy expensive products,” Jaitley added.
Buoyed by India’s victory at the World Court in Jadhav case, Jaitley launched a scathing attack on Pakistan saying the verdict is an indictment of “mockery” that exists in that country in the name of judicial system.
Calling International Court of Justice (ICJ) ordering Pakistan to halt the execution of former Indian naval officer Kulbhushan Jadhav as vindication of India’s stand, he said secret trials are conspiratorial in nature and denial of consular access emphasised the point.
“This order, though interim, is a very serious indictment of the kind of mockery that exists in Pakistan in the name of judicial system,” he said.
Jaitley said the order highlights that an alleged accused has a right of effective defence.
“Unless there is an effective defence the proceeding doesn’t inspire the confidence and fairness,” he said. “Consular access is part of the right to defence.”
India had dragged Pakistan to the ICJ over the death sentence handed down to Jadhav by a secret military court for alleged espionage and sabotage activities.
ICJ today stayed the execution pending a final decision in the proceedings.
“Secret proceedings conducted in darkness are conspiratorial in nature and a denial of consular access emphasises the denial,” Jaitley said adding the verdict was vindication of India’s stand.
Asked about Pakistan’s rejection of ICJ verdict over jurisdiction, he said: “The ICJ ruling is based on the international notions of rule of law and civility. If any country says I don’t accept the ruling, is the country going to put itself in a position that it is guilty of such a heinous crime violating all international norms.”
Earlier in a series of tweets, Jaitley — who is also the Finance Minister and is here for the GST Council meeting — had called the ICJ order a win for rule of law.
“#ICJ verdict endorses the relevance and necessity of procedural and substantive fairness which was denied by Pakistan,” he tweeted.
He also complimented Harish Salve, who represented India at the ICJ at The Hague. “Well done! #HarishSalve – you have done India Proud.”
“Congratulations to EAM Smt. @SushmaSwaraj ji and the entire Hague team,” he said in another tweet congratulating the External Affairs Minister.
Meanwhile, Foodgrains and common-use products like hair oil, soaps and toothpaste as also electricity will cost less from July 1 when the GST is scheduled to be rolled out as the all-powerful GST Council today finalised tax rates for bulk of the items.
While the Council fitted all but six items in 5, 12, 18 or 28 per cent tax brackets, cars will attract the top rate as also a cess in the range of 1 to 15 per cent on top of it.
Smalls cars will be charged 1 per cent cess on top of 28 per cent tax, mid-sized cars will attract 3 per cent cess and luxury cars 15 per cent cess on top of the peak rate.
Aerated drinks too have been put in the 28 per cent bracket but the rates for bidis along with gold, footwear and branded items would be decided tomorrow.
The Goods and Services Tax (GST) on coal has been brought down to 5 per cent from the current tax incidence of 11.69 per cent, thereby making electricity generation cheaper.
The GST rates for all but six items were finalised at the first day of the two-day meeting here of the GST Council, headed by Union Finance Minister Arun Jaitley and comprising state representatives.
Common use products like hair oil, soaps and toothpaste will be charged with a single national sales tax or GST of 18 per cent instead of present 22-24 per cent tax incidence through a combination of Central and state Government levies.
ACs and refrigerators will fall in the 28 per cent tax slab while life-saving drugs have been kept at 5 per cent rate.
All capital goods and all industrial intermediaries would attract 18 per cent tax instead of 28 per cent.
Milk and curd will continue to be exempt from taxation when the GST replaced current indirect taxes. ‘Mithai’ or sweets will attract 5 per cent levy.
Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 per cent, almost the same as current incidence.
Prices of foodgrains, especially wheat and rice, will come down as they will be exempt from the GST. Currently, some states levy Value Added Tax (VAT) on them.
“We have finalised tax rates for a majority of items as well as the exempt list (at today’s meeting),” Jaitley told reporters here.
Out of the 1,211 items, the GST rate for all but six was decided on the first day, he said, adding the tax rate for items that would be decided tomorrow include gold, footwear, branded items and bidi.
“Rates have been finalised for the rest,” he said.
Also, the GST for packaged food items is to be finalised.
Tomorrow’s meeting will also decide on the rate of tax for services, the finance minister said.
“(With) the standard rate items of 12.5 per cent and 15 per cent, plus the cascading effect of local taxes, the tax rate was going up to 30-31 per cent. These 30-31 per cent taxes… Have all been brought down to 28 per cent.
“Of these, some are items to be used by common man soap, oil — that has been brought down to 18 per cent. So there will be a substantial reduction as far as those items are concerned. We have kept one criteria in mind that the overall impact is not inflation, in fact it brings down the costs,” Jaitley added.
Revenue Secretary Hasmukh Adhia said 7 per cent of the items fall under the exempt list while 14 per cent have been put in the lowest tax bracket of 5 per cent. Another 17 per cent items are in 12 per cent tax bracket, 43 per cent in 18 per cent tax slab and only 19 per cent of goods fall in the top tax bracket of 28 per cent.
As many as 81 per cent of the items will attract 18 per cent or less GST.
On gold, states demanded a 4 per cent tax even though the rate is not among the 5, 12, 18 and 28 per cent approved bands.
Jaitley said there will be no inflationary impact as most of the rates which are at 31 per cent have been brought down to 28 per cent.
Coal will attract the GST of 5 per cent as against the current tax incidence of 11.69 per cent.
“Cereals will be in exempt list. But what is to be done with packaged and branded food that has to be separately decided. We are yet to make a decision on that,” he said.
Jaitley said the key feature of today’s rate decision has been that “tax rate under GST will not go up for any of the commodities. There is no increase. On many commodities, there is a reduction particularly because the cascading effect of tax is gone.”
“Of several commodities, we have consciously brought down the tax. In the overall basket there would be a reduction, but we are banking on the hope that because of a more efficient system, evasion would be checked and tax buoyancy would go up. That despite reduction the revenue neutrality and tax buoyancy thereafter would be maintained,” he added.
Earlier, Finance Minister Haseeb Drabu today said that Government will seek to pass the Goods and Services Tax (GST) Bill in the Legislative Assembly within the next 30 days,
Drabu told reporters here that the GST Bill is very beneficial for state and they will seek to pass it soon. “We will seek to pass the GST bill in the next 30 days. It will be very beneficial for state of Jammu and Kashmir and we estimate that our tax revenue will increase by Rs 1,500 crore to Rs 2,000 crore,” he said.
The Finance Minister said importing states like J&K stand to benefit from the GST as
there will be no cascading effect of taxes, resulting in fall in prices of commodities.
Drabu said J&K, which is the only state enjoying special taxation powers, will make necessary changes to pass the GST bill, which is billed as the biggest tax reform in the history of independent India.
About bringing real estate under GST, Drabu said:”We are thinking about it.”
The GST is a consumption-based tax levied on sale, manufacture and consumption on goods and services at a national level. Under it, C-GST will be levied by the Centre, S-GST by states and I-GST on inter-state supply of goods and services
Different indirect taxes of central excise duty, central sales tax CST and service tax are to be merged with C-GST while S-GST will subsume state sales tax, VAT, luxury tax and entertainment tax.
In the meantime, Union Finance Minister Arun Jaitley assured the Jammu and Kashmir government of all possible help in restructuring the GST rollout for the state while respecting its special status under Article 370 of the Constitution.
An official spokesman said here that Jaitley promised that the Centre will do all it can in restructuring the GST implementation for Jammu and Kashmir keeping in mind the special status of the state.
Jaitley complimented the Finance Minister Haseeb Drabu for helping organise the final leg of the GST Council meet before the law kicks in from July 1 this year.
Drabu said the historic meeting will make Jammu and Kashmir part of the economic history aimed at reordering the country’s federal polity. “We are now part of the national policy making which will be recorded in history,” he added.
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