Trees and houses are partially submerged in floodwaters in this aerial photograph taken in Kainakary village in the district of Alappuzha, Kerala, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Group Of Ministers To Consult States On Disaster Relief Cess On GST

A group of ministers headed by Sushil Modi will consult states to decide if a disaster relief cess should be levied on the goods and services tax to meet demand for funds after a calamity strikes.

That’s because most of the cesses levied on commodities that contributed to the National Disaster Relief Fund were subsumed under GST, Modi, deputy chief minister of Bihar, said after the meeting of the group. Also, collections from National Calamity Contingent Duty, a major contributor of NDRF, declined from Rs 6,450 crore in 2016-17 to Rs 3,660 crore in 2017-18.

A questionnaire will be sent to states on whether a state-specific or a pan-India cess should be levied and what should be its mechanism, Modi said.

The panel will also hold a discussion with the 15th Finance Commission, which also studies the impact of GST on state finances, and seek opinion from the Attorney General of India, Modi said.

Also read: GST Council May Hike Cess On Luxury Cars To Help Disaster-Hit States

The group of ministers to examine “Modalities for Revenue Mobilisation in case of Natural Calamities and Disasters” met for the first time in Delhi today.

Finance Minister Arun Jaitley, at the time of the constitution of the panel, had said the committee will suggest guidelines to levy a natural disaster relief cess with two factors in mind.

They are:

• Whether the tax should be levied pan-India, and if so, should it be on luxury and sin goods.

• If there should be a distinction for natural calamities where the National Disaster Relief Fund is deemed enough.

The need for such a fund comes against the backdrop of Kerala Finance Minister Thomas Isaac requesting the central government to allow it to increase its share of the GST on some items or impose a national cess on select commodities to fund rehabilitation after the state was affected by the worst flood in nearly a century.

Besides Modi, the panel comprises Assam Finance Minister Himanta Biswa Sarma, Maharashtra Finance and Excise Minister Sudhir Mungantiwar, Odisha Finance and Excise Minister Sashi Bhusan Behera, Punjab Finance Minister Manpreet Singh Badal, Uttarakhand Finance Minister Prakash Pant and Isaac as members.

The panel must submit its report by Oct. 31, 2018.

Also read: A GST Problem That Threatens Domestic Cash Transfer Services