GST Disaster Cess may be discussed in 30th GST Council meeting

By | September 21, 2018
(Last Updated On: September 21, 2018)

GST Disaster Cess

When will GST Disaster Cess will be discussed ?

The goods and services tax (GST) Council will discuss a proposal to levy a GST Disaster Cess cess on a few items across India for a short duration during its next meeting on 28 September (30th GST Council Meeting) , Kerala finance minister Thomas Isaac said on Thursday i.e on 20.09.2018.

The move, however, is unlikely to be welcomed by the industry as cesses are considered to distort the GST architecture. Typically, no input tax credit is available on cesses, thus breaking the supply chain.

Isaac, who was speaking at a press briefing after meeting Union finance minister Arun Jaitley and senior finance ministry officials, is in New Delhi to seek the centre’s support for the reconstruction of Kerala following last month’s devastating floods.

What is the proposed rate of GST Disaster Cess ?

While Kerala had suggested a 10% cess on the state GST component levied by the state, the c entre is of the view that it will be operationally difficult to implement. Instead, the Union finance minister has suggested levy of a small disaster cesses for some items across the country for a limited period.

What is required to implement GST Disaster Cess ?

There  will be  need to a change in laws and the government may need to bring in an ordinance to provide for it. Also, the attorney general is of the view that since the constitutional validity of a cess is being challenged in the Supreme Court, the council should wait for a verdict.

A disaster cess on GST that applies across the country, rather than on state GST (SGST) alone, will send the signal that the central government and other states are backing the rehabilitation and reconstruction efforts of Kerala, which witnessed its worst floods in a century last month.

Whether GST Disaster Cess will part of Compensation to states ?

Isaac added that the centre has agreed to not include the cess as part of compensation calculations. States are compensated by the centre for any revenue losses arising from a transition to GST.

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