Kerala seeks cess on GST to help raise funds

ALAPPUZHA: The Kerala government will ask the goods and services tax (GST) council to abandon the uniform tax structure of the indirect tax regime. Kerala, which faced the worst floods in a century, will seek support from other states to get a free hand in setting tax rates or levy a cess over GST rates to raise emergency funds during natural calamities, the state’s finance minister, Thomas Isaac, said.

In an interview on Wednesday, Isaac said Kerala has no choice but to levy a cess on the state component of GST (SGST) as an emergency measure to meet the huge costs of rebuilding the state once the floodwaters recede.

The Union government has sanctioned ₹600 crore to Kerala as relief, while the state’s initial estimate of damage was much higher at ₹19,512 crore. “The extent of damages to roads cannot be assessed now. The damage estimate of ₹20,000-25,000 crore is a tentative figure,” the minister said.

“One of the main criticisms of GST was that it was straitjacketed. There should be some flexibility vis-à-vis SGST. That is what I am trying to assert. I am going to write to every state finance minister that in contingencies such as this, states must be allowed to have a cess on SGST, which will not affect inter-state trade or income of the centre,” said Isaac.

The GST council had earlier considered a sugar cess to help pay off the dues to sugar cane farmers.

However, the higher minimum support price for sugar approved by the Union cabinet in June had helped sugar mills to reduce the dues.

Isaac said that SGST, the tax collected by states on intra-state supplies, should be a band within which states should have the flexibility to set the tax rate depending on revenue considerations, rather than it being a uniform rate across the country.