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Govt Plans Calamity Cess on GST to tide away Covid19 crisis

The central government is planning for a calamity cess on Goods and Services Tax (GST) to revive the crisis-hit economy attributed to coronavirus pandemic. The ministry has followed the disaster relief cess introduced in Kerala last year for monsoon floods of 2018. Finance ministry has said that proposal will help to earn additional revenue from GST, however, goods and services will not be included and would be fixed on five per cent slab.

Moreover, finance ministers of Kerala and Assam expressed their disagreement on the proposal and termed it a ‘bad idea’ while the nation is going through a big crisis. The GST meeting is likely to be held in a few weeks and issue will be certainly raised.

It is to be noted that Kerala is the only state that has levied such a cess using the Constitutional provision, Section (4) (F) of Article 279 A, which refers to “any special rate or rates for a specified period to boost additional resources during any natural calamity or disaster”.

Finance Minister of Assam said, “The situation is not so appropriate for any cess?” Also one among the member of GST council said, “The industry isn’t during a mood to soak up any cess now. The mood is low, and there are already pay cuts, retrenchments then on.” However, the minister favoured the Lewy cess on alcohol and tobacco products. He further added that situation is improving gradually as GST collection has increased significantly since lockdown to now and likely to increase in next month.

“There’s a loss of 1 quarter, and to hide that we should always make use of other monetary instruments, like borrowing, increase in WMA (Ways and Means Advances), overdraft, etc, provided the central government pays the devolution funds.” Sarma Said

On this move of ministry, Kerala Finance Minister, Thomas Isaac said, “The states are not able to collect the GST, how can there be an additional cess?” He asserted that the centre can play an important role in helping States by borrowing funds from RBI.

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