Study of Tax Revenue Structure in Jammu and Kashmir: Challenges and Opportunities

Sarita Parihar, Veenus Tyagi

Abstract: Tax revenue plays a vital role in strengthening the fiscal capacity of governments and ensuring sustainable economic development. For the Union Territory of Jammu & Kashmir, tax revenue has emerged as a significant source of public finance, especially in the post-reform period marked by the introduction of the Goods and Services Tax (GST) and increased digitalisation of tax administration. This study examines the structure and composition of tax revenue in Jammu & Kashmir, with a focus on identifying its major sources, recent trends, and growth patterns. The paper also analyses the key challenges faced by the tax system, including overdependence on GST, a narrow tax base, compliance issues, and structural limitations of the regional economy. At the same time, it highlights various opportunities for enhancing tax revenue mobilisation, such as broadening the tax base, strengthening compliance mechanisms, promoting economic formalisation, and leveraging technology-driven reforms. The study is based on secondary data collected from official government reports, budget documents, and economic surveys. The findings suggest that while Jammu & Kashmir has made notable progress in tax collection, strategic policy interventions are required to ensure a more diversified, efficient, and sustainable tax revenue structure in the long run. This paper examines the structure of tax revenues in J&K, identifies major sources, highlights key challenges, and explores the opportunities for enhancing revenue mobilisation. In developing countries, fiscal policy reforms try to solve the imbalance between revenue and spending, typified as Jammu and Kashmir's position. As a special status state under Article 370 of the Indian Constitution, it faces particular economic problems due to its geographic and institutional composition. Even though public revenue increased somewhat between 1993 and 2014, the region's tax-to-GDP ratio remains low. The state has faced variations in its revenue sources, particularly a drop in central grants over time and a fiscal deficit that climbed from 4.1% in 1990 to 7.36% in 2014, topping deficits in other special category states. This illustrates ongoing difficulties in managing public spending and addressing developmental requirements.

Keywords: Tax revenue, Fiscal policy, GST, Public spending

How to Cite?: Sarita Parihar, Veenus Tyagi, "Study of Tax Revenue Structure in Jammu and Kashmir: Challenges and Opportunities", Volume 15 Issue 2, February 2026, International Journal of Science and Research (IJSR), Pages: 506-510, https://www.ijsr.net/getabstract.php?paperid=SR26207122655, DOI: https://dx.doi.org/10.21275/SR26207122655