Ladakh seeks Goods and Services Tax exemption

Ladakh, the cold desert of the country, has unanimously sought exemption of the goods and services tax (GST) for the Scheduled Tribes living in the region, citing “country’s security considerations in border area and to keep a check on the menace of smuggling of Chinese goods into the region”.
Representatives of Ladakh, comprising lone MP from Ladakh Thupstan Chhewang, Minister of Cooperative and Ladakh Affairs in coalition government Chhering Dorjey and Congress Legislature party leader Nawang Rigzin Jora, who is also Leh MLA, have conveyed their concerns to the GST Council chairman, Arun Jaitley, saying the “non-exemption of the GST to Ladakh region will have debilitating effect on Ladakh’s economy”.
During their meeting with Arun Jaitley at New Delhi on July 24, the leaders from Ladakh, although welcomed the implementation of the GST in the country, cited the severe problems being faced by the people of the region while demanding exemption of the GST to the region.
“While the GST is a welcome step in creating uniformity of taxation across the country, it can have debilitating effect on Ladakh’s economy and society. The Ladakhi economy has to face a disproportionate level of physical and economic disadvantages as compared to the other regions of the country,” they said in a submission made to the GST Council.
The leaders said Ladakhremains cut off from the rest of the country for most part of the year due to the blockade of all roads resulting from heavy snowfall.
“Even when roads are open for a few months, the distance from the nearest supply markets such as Jammu and Srinagar are so long that the goods, commodities and other building and developmental material become very expensive because of the heavy transportation costs, breakage in transit and a high transportation time leading to higher costs,” they said, adding that it adversely affects the revenue margins and savings from such economic activities.
“Moreover, the air connectivity to Ladakh is the costliest in the country. The average cost of cargo transport to Ladakh is about Rs 80 per kg,” they said.
“If special positive discrimination in favour of Ladakhi business and trade is not provided, traders will not be able to continue to operate. A specific exemption for the ST residents of the Ladakh region, even for a short period of time, can act as an important catalyst leading to expansion and development of trade,” they said, adding that “a growing and vibrant Ladakh region also helps to meet the objectives of the country’s security considerations in border area”.
According to them, Ladakh’s contribution towards the sales tax or VAT collections of the state is miniscule and it was just 0.53 per cent in the year 2015-16. The leaders claimed that Jaitley had assured them to take up their proposal to the GST Council and necessary action would be taken thereafter.