Finance Minister Arun Jaitley has proposed additional cess on select commodities under the Goods and Service Tax regime to raise funds to help Kerala tide over the damages caused by floods, a state minister said today.
The proposal to levy a cess is expected to come up for discussion at the GST Council meeting on Sept. 28.
Kerala's Finance Minister took to Twitter to comment on the announcement.
GST must be made flexible to accommodate unforeseen urgent demand for resources as in the case natural calamities. Kerala welcomes the suggestion of hon'ble FM for a national level cess on selected commodities fo a specified period to help such states. GST Council to discuss.
The issue regarding additional cess for funding rehabilitation activities in flood-hit Kerala was discussed on Thursday at a meeting between Isaac and Jaitley.
Isaac has also pressed for additional funds from the Centre to rebuild the state, which is estimated to have suffered a loss of Rs 20,000 crore (as per a preliminary estimate).
The initial proposal of the Kerala Government that it should be allowed to raise funds by imposing cess on sale of goods and services under GST by the state government did not find favour with the Union finance minister as it could complicate the whole structure of the new tax regime—which is one nation, one tax.
The government may have to amend the GST law to permit imposition of a new cess in the new indirect tax regime. The GST subsumed all cess, surcharge and local levies.
The tax structure currently has a four-slab rate structure of 5, 12, 18 and 28 percent. Besides, luxury items, sin and demerit goods attract a cess on top of the highest tax rate.
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