Kerala Flood Additional Cess

Enforcement of additional cess on goods and services is done to raise funds to rebuild the state after the devastating floods of 2018.

Additional Flood cess will come into effect from 01/08/2019. Initially implementation was decided as 01/06/2019 which was deferred later to 01/07/2019 and than to 01/08/2019.

Update on 29th May 2019

Today a new notification came under Bulletin No. 659 under 14th Kerala assembly, the date for implementation of KFC has been extended to 1st July 2019 and GST will be charged on Taxable Value itself that is excluding the KFC. Hence in the above example GST will be charged on Rs.100 and not on Rs.101 as shown above. This was before this clarification. Link for the bulletin is – http://www.niyamasabha.org/codes/14kla/bulletins/659.pdf

Key Highlights for the same are as follows:-

 Rate of cess to be charged on the Taxable Value of Supply and not on GST amount.

  • Rate @ 1% on all services and goods having GST rate – 12/18/28%.
  • Rate @ .25% on goods having GST rate – 3% ( gold & silver)
  • Cess will not be charged for goods having GST rate of 5% or below.
  • Exemption for small traders having annual turnover of less than 1.5 Crores.
  • Applicable for all Intrastate supplies only i.e. not for Inter State supplies.
  • Applicable for B2C supplies only i.e. to unregistered person.
  • It should be shown separately in the invoice.

Every taxable personn liable to pay the Kerala Flood Cess shall file a monthly return in Form No: KFC- A on or before the due date for filing of GSTR-3B return, specified under rule 61 of the Kerala Goods and Services Tax Rules, 2017.

The return shall be filed electronically through the official portal ‘www.keralataxes .gov.in’ and e-payment of Kerala Flood Cess due shall be made along with such return.

Further as per the provisions of Section 15, Kerala cess should be included in the value of supply for the purpose of levy of CGST and SGST.

Example

Value of Supply   Rs.100.00
Add: KFC @1% Rs.    1.00
Rs.101.00
Add: CGST@9% Rs.    9.09
Add: SGST@9% Rs.    9.09
Total  Rs.119.18 

As of now as per the reading of Notification and Sec 15, it comes out that GST need to be discharged on Rs.101. Clarity for it is required whether it need to be discharged on Rs.100 and the same has been asked from Commercial Tax Department and will be shared when received.

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5 Comments

  1. P S Thomas says:

    Do we have to register separately with Kerala State for paying this 1% cess directly to Kerala Govt?
    Could any one answer this query, please?

  2. CA Shubham Kansal says:

    Dear All,
    Today a new notification came under Bulletin No. 659 under 14th Kerala assembly, the date for implementation of KFC has been extended to 1st July 2019 and GST will be charged on Taxable Value itself that is excluding the KFC. Hence in the above example GST will be charged on Rs.100 and not on Rs.101 as shown above. This was before this clarification.
    Link for the bulletin is – http://www.niyamasabha.org/codes/14kla/bulletins/659.pdf
    Kindly be updated accordingly.

  3. CA Suresh Babu says:

    Well said!!!.But the it would create a turmoil in the entire GST concept of “One Tax One Nation”. What would happen in Odisha, if they pan to follow Kerala Govt.To remove the Cess in the computation of value of supply for the calculation of GST, an amendment is required in GST Act and State Govt cannot do anything not to add such cess along with taxable supply as as per GST Act such value whatever it be must be added along with value of supply to compute GST. Ultimately GST will go up(CG and SG are happy) but Prices will go up( Consumer is unhappy)

  4. OMG says:

     section 14(2) of the Finance Bill 2019 states that – The cess shall be levied on such supplies of goods and services as are  specified in column (2) of the table below, on the basis of value determined under e section 15 of the. Kerala State Goods and Services Tax Act .

    Value as per section 15 includes Cess,
    whether the  1% cess has to be on value Including Cess  .

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