Thiruvananthapuram: The flood cess will come into effect in the state only from July. The decision comes because of the confusions in the law regarding it. GST department informed that cess will be collected from July 1.
Earlier a notification was issued stating that, flood cess which will be applicable for goods and services, will come into effect from June 1. Cess of 0.25 per cent was also imposed on gold, silver and platinum jewellery.
The difficulties in imposing the cess came to light after the notification was released. If it is imposed as proposed now, the tax will also increase apart from the cess which will be equivalent to double the tax. This can be done away with only if GST council issues new notification stating the usual norms while imposing cess is not applicable for flood cess. For this state government has requested the GST council in this regard.
The decision was to collect 1 per cent cess for two years on all goods and services above the 5 per cent tax slab. i.e, a product which has 12 per cent tax will become 13 per cent taxable.
But according to GST law, the basic cost is that including the cess. The tax will be calculated on it. i.e, if the basic cost of a product is Rs.100, with addition of cess, it becomes Rs.101. The tax will be on this price. But if the cess is not linked to the price, only the tax percent will increase.
Deferring for the second time
The budget session had suggested to enforce additional cess on goods and services to raise funds to rebuild the state after the devastating floods of 2018. Though the initial decision was to enforce the cess from April 1, it was postponed to June 1 in view of the Lok Sabha polls. Now, for the second time, it is being postponed to July 1. Within two years, government is aiming at collecting Rs 1200 crore through the introduction of flood cess.