28 May 2019

Kerala Government notifies Kerala Flood Cess

The GST council in its 32nd meeting had approved the levy of calamity cess on intra-state supply of goods and services within the state of Kerala for a period not exceeding two years to recoup the loss of property due to flood. However, unlike other tax announcements made after the 32nd Council meeting, the levy of calamity cess was put on hold and as a result did not come into effect from April 2019. Now, the Kerala state government has issued a notification to impose Kerala flood cess of up to 1% on intra-state supplies from 1 June 2019.

Applicability 
  • The Kerala Flood Cess (KFC) will be imposed on all intra-state supplies of goods and services or both made by a regular taxable person to an unregistered person (B2C supplies) in the state of Kerala from 1 June 2019.
  • KFC will not be applicable to the following class of persons and transactions –
              - Supplies made by a person registered under the composition scheme. 
              - Supplies to another registered taxable person (B2B).
 
Levy and Rate 
  • KFC shall be collected on the taxable value of the supplies and shall be shown separately in the invoice along with other taxes.
  • The rate of KFC applicable to different goods and services is encapsulated in the table below: 
Sr. No. Type of Supply Rate of GST Rate of KFC on Taxable Value
1 Goods 3% 0.25%
2 5% Nil
3 12% 1%
4 18% 1%
5 28% 1%
6 Services All taxable services 1%
 
Manner of Furnishing Return and Payment 
  • Every taxable person under GST liable to pay KFC shall file a monthly return in Form No. KFC-A on or before the due date for filing of GSTR-3B returns, i.e., 20th of the next month.
  • The return is to be filed electronically through the official portal ‘www.keralataxes.gov.in’ and the e-payment of KFC due shall be made along with the return.
  • The details of outward taxable supplies made to unregistered persons shall be mentioned in return. The details furnished in Form No. KFC-A shall match with the corresponding details of outward supplies in GSTR-1.
  • There is no refund provision for excess Kerala Flood Cess paid along with the returns.
SKP's Comments
The introduction of KFC was already announced by the Kerala government in its Finance Act on 9 February 2019. By this notification, only the date and manner of imposition of the tax, and the related compliances are prescribed. Businesses with presence in Kerala may be required to alter their ERP systems and re-evaluate their pricing of goods and services to adapt to the imposition of Kerala Flood Cess from 1 June 2019.  
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