Last Updated on July 28, 2020 by Ravi Sankar Robbi
Kerala Flood Cess
A new cess in the form of Kerala Flood Cess has been introduced by the Kerala state government for the reconstruction and rehabilitation of the state which was severely affected by the massive floods in August 2018.
This additional levy has been proposed by the Kerala state and the same was approved by the GST council in its 32nd Council meeting. In this regard, notification no. S.R.O. 436/2019 dated 29/06/2019 published under Section 14 of the Kerala Finance Act, 2019.
Accordingly, Kerala Flood Cess is applicable on intra-state supply of specified goods and services or both and it will be levied for a period of two years, starting from 1st August, 2019 to 31st July, 2021.
The extracts from the sub-clause (1) of Clause 14 of the Kerala Finance Act, 2019 with respect to the applicability, rates, procedural compliance and penalties relating to Kerala Flood Cess are as follows.
Table of Contents
- Levy and Collection
- Rate of Cess
- Value to be considered for levy
- Remittance of tax
- How to file the return
- Due dates for remission and filing
- When Cess is not applicable
- Penalties for non-compliance
Levy and Collection
It shall be levied on intra-state supplies of specified goods or services or both made by a taxable person to an unregistered person.
Generally, supply between registered persons within the state does not attract KFC, if the supply is made in furtherance of business. However, such supply is also attracts KFC if the supply is made not in furtherance of business.
Though exemption is available only for registered taxable person having GST registration in Kerala. A person situated outside Kerala having registration outside Kerala and receiving an inward supply of service or goods or both where the place of supply is in Kerala will be covered under Cess.
Kerala Flood Cess can be collected from customers by showing separately in the invoice. However, the recipient cannot claim any credit of such cess, as the cess is levied on transactions between taxable persons and unregistered persons.
Rate of Cess
It is to be imposed at one percent on the value of supply of goods or services covered under Schedule II, III & IV of SRO no. 360/2017 dated 30.6.2017. However, goods covered under Schedule V are liable to 0.25 percent cess only.
The table below gives you an easy understanding of the rates applicable to different categories of products and services.
|S.No||Nature of goods or service covered||Rate of Kerala Flood Cess|
|1||Goods taxable at CGST rate of 6%, 9% & 14%||1%|
|2||All services covered under Kerala GST||1%|
|3||Goods taxable at CGST rate of 1.5% i.e. Gold, Platinum, Silver ornaments, Diamonds, Precious stones & imitation jewellery||0.25%|
Value to be considered for levy
Value for levying the Kerala Flood Cess is to be determined as per sec 15 of KGST Act, 2017.
As per Sec 15(1) â€“ â€œThe value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supplyâ€
And according to Sec 15(2), value of the supply shall also include â€œany taxes, duties, cesses, fees and charges levied under any law for the time being in force other than GST, if charged separately by the supplier;
In addition to the above, a new rule 32A is inserted under Kerala State Goods and Service Tax Rules, 2017 which deals with the manner of determination of value of supply in cases where Kerala Flood Cess is applicable. According to this, flood cess would not be included in the value for computing the GST liability.
Illustration for easy understanding is given below.
If the value of supply is Rs.100/- and tax rate of the commodity is 18% GST, the invoice to be raised as shown below:
Value of supply – Rs.100/-
CGST @ 9% – Rs.9/-
SGST @ 9% -Rs.9/-
Cess @ 1% -Rs.1/-
Total sales value -Rs.119/-
Persons who are liable to pay the cess shall get registered by using GSTIN. The taxpayer has to register themselves at www.keralataxes.gov.in with their registered GSTIN. Upon incorporating the GSTIN & OTP sent to the registered mobile number of the user, registration can be obtained from the portal.
Remittance of tax
Kerala Flood Cess collected from unregistered dealers has to be remitted monthly within the due of filing GSTR-3B i.e. before 20th of the following month in which such cess is collected.
No refund available for Kerala Flood Cess paid along with the return.
How to file the return
The Taxpayer has to file a monthly return in Form No. KFC-A before the due date for filing GSTR-3B by providing the following details:
These details include:
- Basic details of taxpayers such as GSTIN, legal name of the business, composition scheme details, return period and jurisdiction.
- Category of supply: Goods chargeable to different rates are to be disclosed separately.
- Value of intrastate supply
- Rate of Kerala Flood Cess at which goods are liable to levy. It can be either @1% or 0.25%.
- Kerala Flood Cess payable
Key point: The details of such outward supplies shall match with the outward supplies as per GSTR-1.
Due date for remission of cess & filing of return
Every taxable person covered under Kerala Flood Cess shall remit the Cess and file a monthly return in Form No.KFC-A on or before 20th of the subsequent month.
When Cess is not applicable
In the following cases, no KFC is applicable.
- Any supply made by a taxable person who has opted for composition scheme under sec 10 of Kerala State Goods and Services Tax, 2017.
- Any interstate supply of goods or services or both between two registered/unregistered persons.
- Any intrastate supply of goods or services or both made by a registered taxable person to another registered taxable person.
- Supply of exempted goods or services under sec 11 of Kerala State Goods and Services Tax, 2017.
- Supply of goods or services taxable under CGST at 2.5% as notified by the state.
Penalties for non-compliance
Interest @ 18% will be applicable for delayed payment of Cess. Other provisions related to non-levy, short levy, interest, appeal, recovery of Kerala Floods Cess will be similar to the provision of Kerala Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017.
Author is a Qualified CMA with an experience of more than 8 years in the industry. He is also an All India Rank holder in both Inter (AIR-26) & Final (AIR-46) examinations of ICAI. He loves to writes articles on Income Tax & GST.