Thiruvananthapuram: Amid the confusion over ‘cess’ or ‘tax’, the State Government has put off to July 1 the collection of one per cent “Kerala Flood Cess” to get a clear mandate from the GST Council.
The government notification issued on May 25, titled “Kerala Flood Cess Rules”, said the cess shall be levied from June 1, for two years, on intra-State supply of goods or services or both, made by a taxable person to an unregistered person in respect of supplies specified in the table under sub-clause 2 of Clause 14 of Kerala Finance Bill 2019 and the cess shall be collectable on the taxable value of supplies...
Trouble started after the government issued a notification on how it proposed to collect the cess. It is understood that the flood cess as envisaged by the government amounted to effective increase in GST rate which requires a clearance by the GST council. The general perception was the cess would be levied only on the MRP.
Traders had threatened to approach the court as the government move amounted to tax on tax.
However, the government had exempted merchants with an annual turnover less than `1.5 crore as well as the sale of goods having less than 5 per cent GST from the flood cess.
The government expected the cess to net an additional revenue of `600 crore in the first year to finance its post-floods rehabilitation, reconstruction an rebuilding efforts.
