Kerala calamity cess gets GST ministerial panel's nod; MSME tax relief goes to Council

NEW DELHI: A ministerial panel under the GST Council on Sunday approved Kerala’s request to levy an additional 1 per cent calamity cess to fund the rehabilitation work in the state that was battered by unprecedented floods a few months ago. Kerala can levy the cess for up to two years, said Bihar Deputy Chief Minister Sushil Modi, who heads the panel.

Another panel on giving relief to micro, small and medium enterprises (MSMEs) discussed a proposal to lift the tax exemption cap for them, but could not arrive at a consensus on the quantum. At present, businesses with turnover of up to Rs 20 lakh are out of the GST bracket.

While Delhi suggested the exemption limit be raised to Rs 40 lakh, Bihar wanted it at Rs 50 lakh. The matter will now be taken up by the GST Council itself, which will meet on Thursday. The meeting will also take a call on the Modi panel’s recommendation on the Kerala cess.

“The GoM has recommended to the Council that Kerala be allowed to levy 1 per cent cess for two years. Also the Centre and states will together decide on increasing the borrowing limit under FRBM for funding natural calamity,” said Modi.

Which all items would attract the cess would be decided by the Kerala government, Modi added. 
As for any other state wanting to levy the calamity cess, it would have to route it through the GST Council, he clarified.

The Group of Ministers (GoM) under Modi also suggested allowing additional borrowing over the permitted limit by states hit by natural calamities.

The second GoM led by minister Shiv Pratap Shukla suggested extending the composition scheme to service providers with an annual turnover of up to `50 lakh. Such service providers can pay GST at 5%.