J&K To Not Receive Centre’s Share of Taxes, Will Only Get Grants: NK Singh
An Indian five hundred rupee banknote is arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

J&K To Not Receive Centre’s Share of Taxes, Will Only Get Grants: NK Singh

The 15th Finance Commission, in its recommendations for 2020-21, has considered Jammu & Kashmir as a union territory, implying that it would be eligible only for grants from the Centre, and not a share of its taxes.

The commission reviews the share of net proceeds of central government taxes between state governments and itself.

The 15th Finance Commission has done its modelling for 28 states, with two union territories of Jammu & Kashmir and Ladakh, the committee’s Chairman NK Singh told reporters in Delhi today.

The Jammu & Kashmir Reorganisation Act, 2019, however, states that “the President shall make a reference to the Fifteenth Finance Commission to include Union territory of Jammu & Kashmir in its Terms of Reference, and make award for the successor Union territory of Jammu & Kashmir”.

“We’ve received no such reference to treat J&K as a state; we have gone by what we should go by,” Singh said. “We did our modelling for 28 states, and not 29 states, and two new union territories of J&K and Ladakh.”

Net proceeds of taxes are admissible only to states, Singh said. “It will go as grants, but that doesn’t mean we haven’t factored that.”

The commission was given an extension to submit its final report after Jammu & Kashmir was split into two union territories. It has already submitted a report to the President with its recommendation for 2020-21 and will submit a full report with recommendations for five years starting 2021, by Oct. 30, 2020.

The Centre had sought Parliament’s nod last month to give Rs 8,821 crore to the union territories of Jammu & Kashmir and Ladakh after they were officially carved out of the Jammu & Kashmir state in October. The amount was on account of the state’s share of taxes based on 14th Finance Commission’s recommendations and includes its share of net proceeds of taxes for November and December.

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