GST Council mulls cess to help flood-hit states

Mumbai : The 30th Goods and Services Tax (GST) Council will be held on Friday. The meeting, which will be chaired by Finance Minister Arun Jaitley through video-conferencing,

will reportedly consider an additional cess for a limited period of time to help states affected by natural calamities. Funds raised from the cess are meant to be utilised for rehabilitation works going on the states. It may consider increasing the cess on luxury cars. The proposal to hike the cess, subject to a ceiling of 25 per cent, would be discussed in the meeting of Goods and Service Tax Council scheduled on September 28. Currently, the highest cess that the GST Council can impose on cars is 25 per cent without an amendment to the GST (Compensation to States) Act. The current GST on cars is 28 per cent.

Kerala Finance Minister Thomas Isaac tweeted that he had recently met Union Finance Minister Arun Jaitley to discuss imposing a cess on select items for a specified period.

“GST must be made flexible to accommodate an unforeseen urgent demand for resources as in the case of natural calamities,” Isaac tweeted after meeting Jaitley.

“Kerala welcomes the suggestion of honourable FM for a national level cess on selected commodities for a specified period to help such states,” he added.

“If the government goes ahead with such a measure for Kerala flood relief, it may need to carefully evaluate the modality of its implementation such that it doesn’t distort the overall GST structure and it’s easy to implement for the industry,” said Abhishek Jain, an indirect tax partner at EY India.

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