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Why the GST Council meet in Srinagar is important

LiveMint logoLiveMint 18-05-2017 Anil Padmanabhan

Srinagar: Over the next two days, the finance ministers of India’s states and Union territories will deliberate to chalk out the final contours of the goods and services tax (GST) scheduled for roll out on 1 July. It is by far the single-biggest piece of indirect tax reform ever attempted in modern India; among other things, it will economically unify the country, making the movement of goods and services seemless.

Here are three reasons why the 14th meeting of the GST Council in Srinagar is important.

First, the meeting will decide which commodity will fall in which of the four tax slabs. Services are likely to be taxed at two slabs—12% and 18%—while goods are to be taxed at five different rates—5%, 12%, 18%, 28% and 28% plus cess.

The heavy lifting has been done by the back office of the GST Council. But now the political bosses have to sign off on these decisions—some of which can be very contentious, especially those goods that will be zero rated.

The manner in which the Council will thrash out consensus will be interesting. Its track record—where the Council has overcome serious differences—augurs well for the final outcome.

Second, it sets the clock ticking for the final rollout on 1 July. At the moment, finance minister of West Bengal Amit Mitra has voiced apprehensions on the preparedness of the system to make the transition on this date. Some have been pushing for its delay till 1 September. The eventual date will be decided at Srinagar.

Third, it seeks to etch a new narrative on India’s northern most state: Jammu and Kashmir (J&K). At the moment, the only reason the state makes it to national headlines is the coverage of disruptions, pitched battles between irate students and the armed forces and, of course, the increasingly frequent cross-border infiltrations by terrorists.

In an interview to Mint, J&K finance minister Haseeb Drabu, duly noted the opportunity to impact the existing narrative and the historic nature of the meet: “It makes us (Jammu and Kashmir) participate somewhere in the national policymaking. We are a part of the whole process and history will record it saying that the meeting was held in Srinagar, consensus was arrived at. So it makes us a part of the economic history of India, which is very important for us.”

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