Relief for Kerala as central panel allows flood cess

Goods transportation
A ministerial panel gave nod to levy 1 per cent calamity cess by Kerala for two years to secure funds for rehabilitation work. Photo: Istock

New Delhi: A ministerial panel that initially declined to concede Kerala's demand for a cess collection on top of the Goods and Services Tax (GST) to boost flood relief finally gave in as Finance Minister Thomas Isaac conveyed that the state has no other option to fund rehabilitation work.

The panel gave nod to levy 1 per cent calamity cess by Kerala for two years to secure funds for rehabilitation work.

The panel had initially taken the stand that it was not practical to enforce a cess at the national level when calamities happen. They raised the argument that it will set a bad precedent.

However, as Isaac pushed the Kerala demand, panel chairman Sushil Kumar Modi and Union Minister of State for Finance Pratap Shukla supported it. That was crucial for Kerala in clinching the deal. The panel, which also allowed acquiring a loan from abroad, wasn't willing to recommend to the council a specific amount to be sanctioned.

Isaac, meanwhile, insisted that the state's lottery segment will not be opened up to private operators. “The back room move is to unify the tax at 28 per cent, raising it from 12, and bring traders in lottery tickets from other states to Kerala,” he said. “We can't allow it. We have written to Union Finance Minister Arun Jaitley about it.”

Return to be limited

The ministerial panel also approved a proposal to implement anticipatory tax on those whose turnover is up to Rs 1.5 crore. The advantage is that traders need to file income tax returns only once in an year.

A composite tax will be brought in the service sector. It is hoped that taxes up to 18 per cent will then decline to 5 to 8 per cent.

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