Thiruvananthapuram: GST calamity cess put on hold, aviation fuel tax cut

Thiruvananthapuram: Finance minister T.M. Thomas Isaac has put on hold the calamity cess of one per cent that he had proposed in the budget. He also slashed the sales tax on aviation turbine fuel in all airports in the state from 28.7 per cent to 5 per cent.

He made the announcements during the reply to the Budget discussion in the Assembly on Wednesday. The minister had fixed a target of Rs 600 crore from the calamity cess. He also announced a special package of Rs 5,000 crore for Idukki to be implemented in three years. Normally, the Budget announcements will come into effect from April 1, the start of the fiscal year, automatically.

Mr Isaac stated some procedural reasons for postponing the cess. He claimed that as the cess was applicable only for the state, the functioning of the GST network may be affected. Hence, the rates will have to be reworked for the state alone. The government needed to hold discussions before taking a decision, he said.

However, the politics behind the announcement was exposed when Mr Isaac asked the Opposition MLAs to rework the speeches that they might have already prepared.

Sources said that the cess will come into force from August 1 after the vote on account for three months comes to an end and the full budget comes into effect.

The one percent cess on all goods and services falling in the three higher GST slabs 12, 18, and 28 percent had received much criticism. However, essential goods in the zero and 5 percent GST slab were exempted. The budget also announced a 0.25 percent cess on gold and diamond.

The CPM leadership which felt that the cess would have an adverse impact on the Lok Sabha elections is believed to have persuaded Mr Isaac to keep the decision in abeyance at least till the elections were over.

The decision to cut aviation fuel tax to 5 percent in all the four airports in the state was also a demand raised by the Opposition in the Assembly.

The Opposition in an adjournment motion on February 4 had criticised the decision to offer a one percent relief in aviation fuel tax to the new Kannur airport alone. Chief Minister Pinarayi Vijayan, while replying to the motion, said that relief was given to Kannur because it was the only airport that was included in the Union government’s Ude Desh ka Aam Naagrik (UDAN).