7-member panel to decide on disaster cess for Kerala

The GST Council on Friday avoided an immediate decision on a 'disaster cess' to help flood-affected Kerala tied over its losses and opted for wider consultations through a seven-member ministerial panel.

The committee headed by Finance Minister Arun Jaitley will look into issues including whether the new tax should be levied only in the state concerned or should it be an all-India levy, and that should it be on specified luxury or sin goods only.

The GoM will also look into whether National Disaster Response Fund (NDRF)/State Disaster Response Fund (SRF) mechanism is sufficient to deal with calamities and also define circumstances where the ‘calamity tax’ can be imposed as also the legal aspect of imposition of such a tax within the GST.

“It was important not to implement the cess in a haste as the view we take today will set a precedent for the country for a very long time,” Jaitley told reporters after chairing a brief GST Council meeting with his state counterparts through video conferencing here.

He said since it was a meeting through video conferencing it was kept short and not many things were decided.

According to Article 279 (A) of the Constitution, the GST Council can make recommendations to the Central government and states on any special rates for raising additional resources during natural calamities, disasters and special provisions for certain states.

Kerala suffered one of the worst floods in the century leaving 370 people dead and around 12 lakh homeless.

According to initial estimates, the state has suffered losses to the tune of Rs 5,000 crore and Finance Minister Thomas Isaac has pressed for additional funds over and above National Disaster Relief Fund for the state to reconstruct its infrastructure.