Finance Minister Arun Jaitley has proposed additional cess on select commodities under GST (Goods and Services Tax) to raise funds to help Kerala tide over the damage caused due to floods, Kerala Finance Minister T.M. Thomas Isaac has said in a tweet.
The proposal is expected to come up for discussion at the GST Council meeting scheduled on September 28.
“Kerala welcomes the suggestion of hon’ble FM for a national level cess on selected commodities for a specified period to help such states. GST Council to discuss,” Dr. Isaac.
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Dr. Isaac was of the view that GST should be made flexible to take care of “unforeseen urgent demand for resources as in the case of natural calamities“.
The issue was discussed on Thursday during a meeting between Dr. Isaac and Mr. Jaitley.
Dr. Isaac has also pressed for additional funds from the Centre to rebuild the State, which is estimated to have suffered a loss of ₹20,000 crore (as per a preliminary estimate) due to the floods.
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The initial proposal of the Kerala government that it 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.
Rolled out from July 1, 2017, GST has subsumed all cess, surcharge and local levies. GST currently has a four-slab rate structure of 5, 12, 18 and 28%.
According to industry sources, levying of a new cess may not be an easy option as a case in this regard is pending in the Supreme Court.
The government had toyed with the idea of levying a sugar cess to help the industry earlier this year, but abandoned the move after announcement of increase in Minimum Support Price (MSP).