GST Council Forms GoM on Natural Calamity Cess

New Delhi, Mar 6 (PTI) The GST Council has constituted a Group of Ministers under Uttar Pradesh Finance Minister Suresh Kumar Khanna to suggest uniform policies for levying a special calamity cess in case of natural disasters in a particular state.

The seven-member GoM will also examine the constitutional and legal feasibility of levy of a special cess by states for revenue mobilisation in case of a natural calamity.

Simultaneously, it would examine whether the special cess should be restricted to some specific sectors or should be across the board. Also, whether it should be on B2B supplies only or B2C supplies only or both.

The other members in the GoM include Finance Ministers from Assam (Ajanta Neog), Chhattisgarh (O P Choudhary), Gujarat (Kanubhai Desai), Kerala (K N Balagopal), Uttarakhand (Premchand Aggarwal) and West Bengal (Chandrima Bhattacharya).

The GoM would also examine and identify the framework to be used to classify an event as a natural calamity/disaster for the purpose of levying such special cess by states under the GST regime.

Additionally, the GoM would recommend the rate structure and time duration for which the special cess should be levied. It is also expected to look into whether any alternate mechanism can be devised for helping states in case of a natural disaster without altering the basic structure of GST.

The GST Council, in its December 21, 2024 meeting, had decided to set up a GoM to examine uniform policies on imposition of cess in case of a natural calamity/disaster in a particular state.

In the council meeting in December, Andhra Pradesh Finance Minister Payyavula Keshav demanded a 1 per cent calamity cess be levied on certain luxury goods consumed in the state.

The extra revenues would be utilised towards the relief work arising out of the flood that hit the state in September-October, 2024, Keshav had said.

The council then decided to set up a GoM, which among other things, will identify the framework for classifying an event as a natural calamity for levying such special cess.

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

In 2018, the GST Council decided to set up a GoM to look into similar demands made by Kerala.

The GoM in January 2019 decided to approve the levy of 1 per cent 'calamity cess' by Kerala for two years to fund rehabilitation work in the state hit by floods. The goods and services that faced the 1 per cent cess were decided by Kerala.