A New GST Chapter In J&K

India's Goods and Services Tax has been called a game-changer since it was introduced. It simplified a tangle of indirect taxes, promised transparency, and aimed to make life easier for businesses and consumers alike. Yet for many, GST remained confusing, with multiple rates and frequent changes that made shopping, running a business, or paying taxes a headache.

Now, the Modi government has made it simpler. GST has been cut down to two main rates: 5% and 18%, with a 40% rate for luxury and sin goods. Families will spend less on everyday items, businesses will have clarity, and the economy may get a much-needed boost from increased consumption. Lieutenant Governor Manoj Sinha called it a“Next-Gen GST,” saying it will empower small businesses, farmers, and manufacturers while improving ease of living and ease of doing business.

But in Jammu & Kashmir, the story is more complicated. Chief Minister Omar Abdullah has warned that the new rates could cut GST revenue by 10–12%. That is a serious concern.

GST makes up about 61% of the UT's tax revenue. A drop of this size could slow public projects, affect essential services, and put pressure on an already fragile fiscal situation, especially after the Pahalgam attack and subdued tourism in the region.

J&K has made progress since GST came in. Registered dealers grew from 72,000 in 2017 to over 2.2 lakh today. Monthly inflows have jumped from ₹200 crore to nearly ₹723 crore. More people and businesses are joining the formal system, making compliance smoother and collections more predictable.

Still, J&K's share of India's total GST remains tiny: just 0.43%. With limited industrial activity and heavy reliance on indirect taxes, the UT feels the impact of national reforms more sharply than other regions.

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