Flood Cess in Kerala to be withdrawn from Sunday

Kerala will forfeit revenue of an estimated Rs 800 crore when the Flood Cess renders itself infructuous from August 1 even while the State government is exploring avenues to shore up its Covid-ravaged finances. But the trade fells it is better late than never, given the approaching busy Onam festival season.

GST Commissioner of Kerala recalled that that the Flood Cess was introduced on August 1, 2019, with a view to raising resources for rebuilding the state following the devastating floods of 2018, and it was made applicable for two years. This period ends tomorrow (August 1), the Commissioner said.

Consumers told to check

The Flood Cess was fixed at one per cent on applicable of GST of five per cent for specified items and 0.25 per cent for gold. With the changeover to the new regime, assessees were asked to bring adequate change to the billing software so that the Cess is not charged with effect from August 1, 2021.

Finance Minister KN Balagopal asked consumers to be vigilant on this front and check their bills since the State government was not in a position to deploy adequate staff for checking the billing software due to Covid-19 restrictions. He exhorted consumers to insist on bills during a transaction and also to check without fail if the Flood Cess has been wrongly charged on them from Sunday.

Weekend lockdown allows time

Since the state has gone into a weekend lockdown for two days today and tomorrow (Saturday and Sunday), it would give traders adequate time to tweak their software, if not done already. For others, the changeover would be automatic since it would already have been programmed to lift from August 1.

Traders hope that the State government turns lenient towards them during the Onam season when normally business peaks, an opportunity denied to them during the last two years. They expect the government to announce some relaxations, though it hand burnt its hands on this count already.

Reduction in prices

Meanwhile, withdrawal of Flood Cess all over the state from August 1 is expected to lead to a reduction in prices of at least 1,000 items for which GST is charged in the slabs of 12 per cent, 18 per cent, and 28 per cent. The Cess was not applicable on essential items such as rice, salt, sugar, vegetables and fruits.

Big ticket times for which the price reduction would be marked include gold, silver, motor car, motorcycle, tyres, mobile phone, camera, CCTV, computer/laptop monitor, washing machine, dish washer, grinder, television, airconditioner, water heater, mixy, watch, clock, fan, refrigerator, microwave oven, air cooler, pressure cooker, umbrella, cake, ice-cream and textile items of more than Rs 1,000.

Motor cars to be cheaper

The price difference will be notable for motor cars for which, along with the base price, the difference will be proportionately reflected in road tax and insurance as well. A back-of-the-envelope suggests that this will bring down the price of Maruti Swift car by Rs 5,000 to Rs 6,000.

In some cases, reduction may take the vehicle to a lower slab and yield savings in applicable GST, too. In Kerala, cars are taxed at nine per cent on a purchase price of up to Rs 5 lakh; 11 per cent for a price up to Rs 10 lakh; 13 per cent for Rs 15 lakh; 16 per cent for Rs 20 lakh; and 21 per cent for anything above.

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