After a long time since it got approval from the GST Council, the Kerala Government has decided to impose one per cent cess on the goods and services supplied within the State to final customers from June to provide relief and rehabilitation to those affected by flood in the state last year. The cess would be imposed for two years.
A proposal to levy a disaster cess on the Goods and Services Tax (GST) was tabled before the GST Council in October.
The state had originally proposed a 10 per cent cess on SGST, the tax revenue for the state from the intra-state supply of goods and services, to mobilize funds for the state’s post-flood rebuilding activities. However, Jaitley put forth an alternate proposal for an all-India GST cess. “The tweaking of the state’s idea is the reason for the delay. Our original proposal was for a state-specific cess which could have been implemented without difficulty. Keralites would have wholeheartedly welcomed it, too. At least 2,000 crores would have been collected in two to three years,” he said.
A notification issued by the State Government last day said “As per clause 14 of the Kerala Finance Bill, 2019 (Bill No.185 of the fourteenth Kerala Legislative Assembly), there shall be levied a cess called the Kerala Flood Cess on such intra-State supplies of goods or services or both made by a taxable person as provided in section 9 of the Kerala State Goods and Services Tax Act, 2017 (20 of 2017) for the purposes of providing reconstruction, rehabilitation and compensation needs which had arisen uue the massive flood that occurred in the State of Kerala in the month of August 2018, for a period of two years, with effect from the date notified by the Government in the official Gazette. Now, the Government have decided to levy the Kerala Flood Cess with effect from the 1st day of June, 2019. The notification is intended to achieve the above object.”
There will be no input tax credit on the cess. Kerala is the first state to announce the flood cess.
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