Thiruvananthapuram: Finance minister T M Thomas Isaac has hinted that the levying of one per cent flood cess on products and services he announced in the state budget for the year 2019-2020 may be postponed.
Usually the tax and fee hikes proposed in the budget come into effect from April 1. However, since the cess could send prices soaring in an election year, the government is having second thoughts.
In order to implement the cess, the state GST Act has to be amended. The bill will be moved in the assembly on February 12. The amendment will clearly state that the cess will come into effect from the date of its notification. Accordingly, it is up to the government to decide when it wants to notify the amendment.
As against the budget proposal of levying cess on products and services in the 12%, 18% and 28% slabs, the government could also exclude some products. In response to criticisms against the likelihood of a price surge due to the cess, the minister hinted about a postponement in the assembly.
In his reply, the minister said that the cess will kick off from the date of the notification and the government will think about when to issue the notification.
When the cess is implemented, the GST software will need a major overhaul. This could cause delays too. The 28% GST on cinema tickets has been reduced to 18% by the GST Council. However, since 10% entertainment tax has been added by local bodies, in effect the tax on cinema ticket remains 28%. Therefore, the cinema ticket price will not see a hike.
The minister made it clear that when houses are built for those who lost their homes in the flood, the government will persuade companies to provide building materials at a lower cost.
However, Congress MLA V D Satheesan pointed out that despite the GST Council reducing tax on several products, there has been no price reduction for a single product and the cess is going to be imposed on top of it.
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