GST Council sets up GoM to review help for states hit by natural calamity

The Economic Times By ET Bureau Sep 29, 2018, 11.18 AM IST

Jaitley said it was important to have a mature view on the issue instead of acting in haste as this would set a precedent for future natural calamities as well.

NEW DELHI: The Goods and Services Tax Council has formed a seven-member group of ministers with Bihar deputy chief minister Sushil Kumar as convenor to examine how states hit by a natural calamity can be assisted under the tax regime with steps such as a separate cess.

“We will have a seven-member group of ministers, which in the next few weeks will make a recommendation,” Union finance minister Arun Jaitley, chairman of the council, told reporters after its 30th meeting held via video conferencing.

The panel has Kerala finance minister Thomas Isaac, Assam finance minister Himanta Biswa Sarma, Punjab finance minister Manpreet Singh Badal, Maharashtra finance minister Sudhir Mungantiwar, Odisha finance minister Sashi Bhusan Behera and Uttarakhand finance minister Prakash Pant as members and has to submit its report by October 31.

The finance minister approved the constitution of a GoM to examine the issue regarding ‘Modalities for Revenue Mobilisation in case of Natural Calamities and Disasters,’ the finance ministry said in a statement on Friday. Jaitley said an effort was made to include three categories in the group – the northeastern states, hill states and coastal states – as they usually face calamities.

He said Kerala’s demand to allow imposition of a higher tax or cess within the state to help tide over losses suffered due to floods in August had been considered by the Council. While all states were sympathetic to the demand, the Council said the matter should be examined in a wider context because it would set a precedent.

Kerala had proposed a 10% cess on GST in the state and on Integrated GST on supplies made to the state.

The ministerial panel will look into five issues flagged by the council, including whether the burden of increased tax should be borne by the people of the state affected by a natural calamity or if it should be an all-India levy. It will also consider whether the additional levy should be limited to luxury or sin goods or cover a wider range of products.

The panel will look at the circumstances under which a calamity tax or cess would be available to a state. It will examine if the State Disaster Relief Fund Mechanism and the National Disaster Relief Fund at the central level are sufficient to deal with such calamities.

The NDRF assistance, administered by the ministry of home affairs, has detailed criteria laid out to recognise a calamity and assess the extent of damage and assistance to be provided.

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