The Kerala government has deferred implementation of 1 per cent flood cess to July 1 to avoid double taxation. An earlier circular to implement it from June 1 was withdrawn after the problem of tax over tax was pointed out.
Finance Minister Dr Thomas Isaac said the cess will be imposed only after necessary measures are taken in consultations with the GST Council. Onmanorama had reported that the new cess in the current form will be an extra burden on consumers.
As per Section 15 of CGST Act, the price of a product is inclusive of all cess. The state government notication had introduced it as price+tax+cess. But the tax has to be levied on price+cess. This will drive prices up.
For example, a Rs 10 lakh car will be dearer by Rs 2,800 now. This can be solved if the GST Council issues a notication saying a product’s price excludes cess.
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GST Council authorities have informed state GST commissioner that a notication will be issued soon.
Special MRP difficult
Flood cess also creates inconvenience for producers since products sold in Kerala have to have a separate MRP now. Big producers have shared this concern with the finance minister. Telecom companies, too, have asked for more time to make necessary changes in their centralised bills to accommodate customers in the state.
Changes are required in GST software, too. A new notification can be expected in the GST Council’s first meet after the new government takes charge at the Centre. The flood cess can be levied for two years.
—This story first appeared on Onmanorama
