Government sets up panel on GST ‘disaster levy’ mechanism
government on 28 September set up a seven-member ministerial panel to study the legality of imposing a “disaster levy” to raise funds for states struck by natural calamities, such as the recent floods in Kerala.
After the 30th meeting of the goods and services tax (GST) Council, finance minister Arun Jaitley said it was important to find a well thought-out mechanism to raise funds for natural disasters as it will have long-term implications.
Following the floods, Kerala had suggested a 10% cess on the state component of the GST. Jaitley said the proposal from Kerala needs to be decided at a high level of maturity as it will set a precedence for future events.
In case the levy is imposed by a particular state, there is a risk of businesses moving to another state, said Jaitley. “This is not something that can be decided on the spur of the moment.” Jaitley also said that Kerala finance minister Thomas Isaac was also on the same page, and the government will have to explore options before finalizing a mechanism.
A finance ministry statement said that Bihar deputy chief minister Sushil Kumar Modi will be the convenor of the panel, which will give its advice by 31 October. The panel includes Isaac, Assam finance minister Himanta Biswa Sarma, Maharashtra finance minister Sudhir Mungantiwar, Odisha finance minister Sashi Bhusan Behera, Punjab finance minister Manpreet Singh Badal and Uttarakhand finance minister Prakash Pant.
The group will look into issues, including the possibility of a pan-india levy or state-specific