Ministerial panel approves Kerala’s request for additional disaster cess under GST

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If the additional cess is approved by the GST Council on January 10, Kerala would be the first state in the country to levy a calamity cess.

A ministerial panel on January 6 allowed Kerala to levy an additional calamity cess of 1 percent under the Goods and Services Tax (GST) regime.

“Kerala will be permitted to have 1 percent cess on the value of goods and services across all or select items for two years,” said Thomas Isaac, the state’s Finance Minister, after meeting a group of ministers in the national capital.

According to BloombergQuint report, the items that will bear the additional tax will be decided by the state.

“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,” said Bihar Deputy Chief Minister Sushil Modi.

If the additional cess is approved by the GST Council, Kerala would be the first state to levy a calamity cess.

The GST Council will take a decision on the matter in its 32nd meeting scheduled for January 10.

While the centre had earlier shied away from imposing a state-specific cess, it had upheld the flood-ravaged state’s request citing that additional funds will not only help in Kerala’s resurrection, but will be an institutionalised fundraising mechanism for such disasters in other parts of the country.

In October 2018, the Prime Minister Narendra Modi-led panel had decided to seek states’ views on whether a nationwide or state-specific “disaster tax” should be levied under the new indirect tax regime.

If the Council approves the additional disaster cess, some specifically identified goods would witness a minor hike in price.