GST panel allows Kerala to levy 1% calamity cess

Months after one of the worst floods devastated Kerala, the GST Council may announce the levy of 1% calamity cess by the state to tied over its losses.

The move is expected after a ministerial panel under Bihar Deputy Chief Minister Sushil Modi on Sunday approved the levy of 1% calamity cess by Kerala for a period of two years.

"Kerala had asked the GST Council for levying cess to fund rehabilitation work. The GoM has recommended to the Council that Kerala is allowed to levy 1% cess for two years. Also, the Centre and states will together decide on increasing the borrowing limit under FRBM for funding natural calamity," Modi told reporters after the meeting of the GoM.

The GST law provides for the levy of special taxes for a specified period to raise additional resources during any natural calamity or disaster.

Separately, another ministerial panel under Minister of State for Finance Shiv Pratap Shukla, on giving relief to MSMEs under the goods and services tax, deliberated on the exemption threshold for such businesses. Currently, businesses with a turnover of up to Rs 20 lakh are exempt from the Goods and Services Tax (GST).

Modi, who is a member of the panel on MSME relief, said the GoM was unanimous that the exemption limit for the MSMEs which are the supplier of goods should be increased but there was no unanimity among states. Hence, it was left to the GST Council to decide.

While Delhi suggested that the limit should be hiked to turnover of up to Rs 40 lakh, Bihar suggested it at Rs 50 lakh.

Another suggestion was that for MSMEs with turnover between Rs 50 to Rs 60 lakh, GST of Rs 5,000 be levied, and those between Rs 60-75 lakh, it should be Rs 10,000-Rs 15,000.

"Under the earlier excise duty regime, businesses with a turnover of up to Rs 1.5 crore were exempt. So it was felt that there was a need to give relief to the MSMEs under GST," Modi said.

The GST Council in its meeting on January 10 will discuss the recommendations of the two ministerial panels.