Mirror to Economic Strain: What J&K’s GST share of just 0.43% says about its economy

Srinagar, Jun 27: Jammu and Kashmirís Goods and Services Tax (GST) collection for the financial year 2024-25 stood at Rs 7175 crore, placing the Union Territory 22nd among all Indian states and union territories.

While there has been a slight uptick in revenue compared to previous years, the figure paints a troubling picture.

Despite improved compliance and digitisation efforts, J&K remains a marginal contributor to the national tax pool, primarily due to sluggish business activity across both the Kashmir and Jammu regions.

Out of the total, Rs 2991 crore was collected as Central GST, Rs 1954 crore as State GST, Rs 2113 crore from Integrated GST, and Rs 116 crore through Compensation Cess.

Indiaís total domestic GST mop-up for the same fiscal year stood at Rs 16.75 lakh crore.

J&Kís share is less than half a percent of this amount, reflecting deep structural constraints in J&Kís economy.

The gap between J&K and even relatively smaller or geographically disadvantaged states is becoming increasingly visible.

Uttarakhand, a state with similar hilly terrain and disaster-prone zones, collected Rs 20,670 crore, almost three times J&Kís total.

Himachal Pradesh brought in Rs 10,352 crore and Assam posted Rs 17,415 crore.

Even Goa, with a population of just over 15 lakh, generated Rs 7146 crore, only Rs 29 crore less than J&K.

The reasons for this weak showing are rooted in the overall economic environment across J&K.

In Kashmir, business sentiment has remained dampened due to a combination of inflationary pressure, inconsistent tourist flow, and limited industrial expansion.

Traditional economic mainstays such as handicrafts and horticulture have struggled to maintain growth momentum. ìThis sentiment around low GST collection shouldnít be misunderstood as a call to tax more people. It reflects where we stand financially. Itís a mirror of the current business environment and the economic stress we are operating under,î said a Srinagar-based trader.

In Jammu, which historically performs better on trade and logistics, the past year was marked by slower wholesale turnover and a subdued construction sector.

State Taxes Department officials said that J&K has seen improvements in filing discipline, e-invoicing, and registration numbers, but admit that structural issues limit revenue generation.

ìMore businesses are filing returns, but the value of those returns is low because real economic activity isnít growing fast enough. We need more volume and more value in transactions,î the official said.

The contrast becomes even starker when viewed in the national context.

Maharashtra topped the GST chart with Rs 3.59 lakh crore, followed by Karnataka with Rs 1.59 lakh crore and Gujarat at Rs 1.36 lakh crore.

Even resource-poor states like Jharkhand and Chhattisgarh recorded Rs 36,841 crore and Rs 37,183 crore, over five times J&Kís contribution.

While J&K performs better than some northeastern states and remote union territories like Ladakh (Rs 546 crore), Mizoram (Rs 512 crore), and Arunachal Pradesh (Rs 1201 crore), it falls far behind its potential.

Dadra and Nagar Haveli, a small industrial hub, collected Rs 4408 crore. Sikkim posted Rs 4063 crore while Chandigarh brought in Rs 2915 crore, much closer to J&Kís level despite their size and resource constraints.

Economists say that J&Kís low GST numbers reflect an underperforming economy rather than poor tax enforcement. The absence of large-scale manufacturing, a still-dominant informal sector, and weak purchasing power in rural belts have all contributed to the slow revenue growth.

Efforts by the government to expand the tax base including campaigns in hospitality, medical services, and transport have had only a limited impact.

Trade associations across both regions have repeatedly urged the government to support small businesses with credit access, power subsidies, and incentives for digital billing. Without these systemic changes, they warn, GST collections will remain stagnant.

The data for FY 2024ñ25 sends a clear signal: J&K is not just underperforming on tax revenue, it is underperforming economically. Without fresh investments, improved infrastructure, and an aggressive push to formalise trade and industry, J&K will continue to struggle to keep pace with the rest of the countryís fiscal momentum.