Flood-ravaged Kerala allowed to impose 1% cess for two years


NEW DELHI: Finance Minister Arun Jaitley on Thursday announced tweak in the GST regime for Kerala, which faced the devastating floods last year, allowing the state to impose a cess of up to 1 per cent on intra-state sales for two years. The southern state was ravaged by the worst floods it had seen in years, leaving a property worth crores in shambles.

There is a provision in the GST Act to levy cess to fund flood relief work, Jaitley said after the conclusion of the 32nd meeting of the GST Council. According to GST Act, a special levy can be imposed for a specified period to raise additional resources for coping up with natural calamities.

As per the recommendation of the GST Council, Kerala will now be able to impose a cess of 1 per cent on sale of goods and services within the state for a maximum of two years.

The panel, on Sunday, had cleared the road for levying state-specific calamity cess.

According to media reports, the Kerala Finance Minister Thomas Isaac had come up with the idea of levying cess to fund flood relief work.

Among other major announcement, the government announced to raise the GST exemption threshold to Rs 40 lakh from the earlier Rs 20 lakh, a move which is likely to provide boost to small businesses. The exemption limit for small states has also been increased to Rs 20 lakh from Rs 10 lakh.

The Council also extended the composition scheme to traders from informal sector rendering services or mixed supplies with a turnover up to Rs 50 lakh. The development would allow nearly 20 lakh taxpayers to opt out of GST if they chose to.

Meanwhile, two ministerial panels have been formed to take a closer look at these items before they can be taken up again by the GST Council.