Scrapping off Article 370: Will UTGST be applicable on Ladakh now?

Vaishali Dhek , Last updated: 06 August 2019  
  Share


On Monday, Modi led government took a historic decision to scrape off Article 370 of the Constitution that granted special status to Jammu and Kashmir. The revocation follows the Centre's introduction of the Jammu and Kashmir Reorganisation Bill in Parliament which bifurcates the state of Jammu and Kashmir into two Union Territories - the Union Territory of Ladakh(without a legislature) and the Union Territory of Jammu and Kashmir(with a legislature). 

The Article 370 - which came under Part XXI of the Constitution, which deals with "Temporary, Transitional and Special provisions" granted J&K a special autonomous status. Constitutional provisions that were applicable to other Indian states were not applicable to J&K. Article 370 allowed the state to not only have its own Constitution but also had rights to frame their own laws. The laws passed by Parliament had to be ratified by the assembly to be made laws in the state.

After the revocation of the Article was made. Many tax and finance enthusiasts have hovered questions about how it will change the financial and tax scenario in J&K. Here is a brief description of the same.

Doing away with the exception under section 269S of the Income Tax Act 1961:

As per Sec. 1(2) of the Income-tax Act, 1961, the Income Tax Act, 1961 extends to the whole of India including the state of Jammu and Kashmir. The applicability of the Act extended to J&K as well which implies that scraping off of Article 370 doesn't come with any tax compliance burden for the people of J & K. However, the provisions of 'CHAPTER XXA - Acquisition of immovable properties in certain cases of transfer to counteract evasion of tax' were not extended to the State of Jammu and Kashmir by virtue of the exception contained in section 269S of the Income Tax Act, 1961. 

Now after the revocation of the article which implies the applicability of all the provisions of the Constitution of India to the State of Jammu & Kashmir. The existing restriction on the purchase or acquisition of any immovable property by a non-Kashmiri in the State of Jammu & Kashmir will no longer be in existence. Thus, it can be foreseen with reasonable amount of certainty that the said exception to the applicability of Chapter XXA of the Income Tax Act, 1961, concerning the тАЬacquisition of immovable properties in certain cases of transfer to counteract evasion of taxтАЭ, as contained in section 269S of the Income Tax Act, 1961, will be done away with and the Revenue Authorities will be able to acquire/confiscate any immovable property owned by a tax defaulter resident in the State of Jammu & Kashmir. The said immunity from the confiscation or acquisition of any immovable property owned by a tax defaulter in the State of Jammu & Kashmir, is bound to go.

GST Scenario:

A week after other states moved to GST, the assembly of J&K passed the resolution to join the tax framework. Because of the special provisions applicable to J&K, up till 7th July 2017, the provisions of Central Goods & Service Tax (CGST) & Integrated Goods & Service Act (IGST) were also not applicable in the State of Jammu & Kashmir.On 6th July 2017, the State of Jammu and Kashmir took the first step towards adopting the GST regime with the President of India giving assent to the Constitution (Application to Jammu and Kashmir) Amendment Order, 2017. Resultantly, the One Hundred and First Amendment Act, 2016 to the Constitution of India that paved the way for the introduction of GST in the country, became applicable to the State of Jammu and Kashmir also. Following this, on 7th July, 2017 the Jammu and Kashmir Goods and Services Tax Bill, 2017 was passed by the State legislature, empowering the State to levy State GST on intra-state supplies with effect from 8th July, 2017.
 
The Kashmir Reorganisation bill proposes to bifurcate the state of J&K into two union territories the Union Territory of Ladakh(without a legislature) and the Union Territory of Jammu and Kashmir(with a legislature). Since Ladakh will now become a Union Territory without a state legislature it will now get covered under the provisions of UTGST Act whereas J&K will continue to stay under the provisions of SGST Act.

The revocation of Article 370 will bring about major changes in the economy of Jammu and Kashmir. Let us know in the comment section below what are the possible changes Jammu and Kashmir will witness after the historic move of the government.


 


CCI Pro

Published by

Vaishali Dhek
(Finance Professional)
Category GST   Report

10 Likes   20346 Views

Comments

07 August 2019 Om Goyal

the SC petitioner for Article 370 & 35A, is now withdrawing his petition as per his version in newspapers pl


07 August 2019 RAMESH KUMAR Thakur

No, Till the Disposal of This matter by honorable Suprime Court of India


07 August 2019 M.R.NITISH KUMAR

yes it is applicable


07 August 2019  Vaishali Dhek
Yes, any union territory without a state legislature gets covered under UTGST
  

06 August 2019 Mayank Mohanka

Dear Vaishali, U have taken many inputs from my article titled "Impact of Constitutional Amendment in Article 370 on Income Tax & Gst" published today morning on CaClubIndia site. Anyways, I am ok with it as long as U have understood the provisions. All the best for your future articlesЁЯШКЁЯШК


06 August 2019  Vaishali Dhek
Of course Sir I did read your article for reference. It helped me understand the implications of Section 269S. Ty for such a wonderful read:)
  

06 August 2019 sumedha kasaudhan

what other effects will be on taxation part?


07 August 2019  Vaishali Dhek
The applicability of Income Tax Act 1961 and Gst Act extended to J&K so there are not going to be major tax reforms after scrapping off this article.
  

06 August 2019 Naman Jain

рдЕрднреА рддреЛ 370 рд╣рдЯрд╛рдирд╛ рдпрд╣ рдЭрд╛рдВрдХреА рд╣реИ рдкреВрд░рд╛ рдХрд╛рдо рдмрд╛рдХреА рд╣реИ рд╢реНрд░рд╛рд╡рдг рдорд╛рд╕ рдХреЗ рдкрд╛рдВрдмрди рдЕрдмрд╕рд░ рдкрд░ рд╢рд┐рд╡ рднреЛрд▓реЗ рдХреА рдорд╛рд╣ рдХреГрдкрд╛ рдФрд░ рд╣реЛрдиреА рдмрд╛рдХреА рд╣реИред


06 August 2019 Niral B. SHAH

what should be view on applicability of Stamp Duty ?


Your are not logged in . Please login to post comments.

Click here to Login / Register  



Popular Articles




CCI Pro
Follow us

CCI Articles

submit article