GST Ministerial Panel Approves 1% Disaster Cess For Kerala Under GST:
The ministerial panel under Bihar Deputy Chief Minister Sushil Modi Sunday approved levy of 1% ‘calamity cess’ by Kerala for a period of two years to fund rehabilitation work in the state hit by floods
“Kerala will be permitted to have 1 percent cess on the value of goods and services across all or select items for two years,” state’s Finance Minister Thomas Isaac told reporters after the meeting of group of ministers in Delhi today.
The items on which the additional cess will be levied will be selected by the state, Bihar’s Deputy Chief Minister Sushil Modi, also the panel’s head, said. “If other states urge the Goods and Services Tax Council to allow them to levy this additional cess in case of a calamity, it will decide if the state should be allowed or not.”
If the GST Council gives its approval, Kerala would be the first state to levy a calamity cess and set a precedent for other states, Issac, a member of the Modi-led panel, said.
The GST Council will take a decision on the matter in its 32nd meeting scheduled for January 10.
The move to seek the council’s approval comes after Kerala sought permission for a state-specific cess to raise additional revenues for the flood-ravaged state. While the central government was not in favour of a state-specific cess, it said a time-bound national disaster cess can not only help Kerala, but also be an institutionalized fundraising mechanism for such disasters in any part of the country. The Modi-led panel had in October last year decided to seek states’ views on whether a state-specific or a nationwide “disaster tax” should be levied under the GST.
The council had earlier said the cess will be structured in such a way that only a pre-determined amount will be collected within a specific time limit. If approved, it may see a minor increase in the prices of one or two specifically identified goods, it said.