Severe flood affected the state of Kerala in month of August 2018 due to unusually high rains. The states suffered heavily due to floods. Around 500 persons lost their lives and property damages were estimated to the tune of Rs 400 Billion. The help came from all around the world but to bring back the normalcy, the state needed funds. The only way to generate the additional revenue was to levy additional cess on the supply of goods and services.
The proposal to levy cess was put before the GST Council and same was recommended by the GST council. Post recommendation the Kerala Government has made enactment to levy Kerala Flood Cess vide the Kerala Finance Bill, 2019. Clause 14 of the Kerala Finance Bill, 2019 deals with the levy and collection of Kerala Flood Cess. In addition to this Kerala Government has issued The Kerala Flood Cess Rules, 2019
Let’s understand the levy in detail in forgoing paras of this article.
1. What is name of the levy?
The levy is called as “Kerala Flood Cess”
2. Who are liable to pay Kerala Flood Cess (KFC)?
KFC is liable to be paid by all the taxable person registered under the Kerala Goods and Services Tax Act, 2017.
3. Whether KFC is liable on intra state transaction?
KFC is liable only on intra-state supplies of goods and services.
4. Whether KFC is liable on inter-state transaction?
KFC is not liable on inter-state supplies of goods and services.
5. From which date KFC is liable to paid?
The Kerala Government has issued notification declaring that the KFC will be levied from 1st June 2019 i.e. all the intra-state supplies of goods and services made by registered person to un-registered persons (subject to exemption specified) will be subjected to KFC.
6. What is the period for which KFC is levied?
The KFC will be levied for period of 2 years from 1st June 2019.
7. Whether there are any exemptions for levy of KFC?
KFC will not be levied on below goods and services,
- Supplies made by Composition dealer registered under Section 10 of the Kerala GST Act, 2017.
- Supplies of goods and services exempted from payment of GST
- Supplies of goods and services made by registered person to another registered person.
In other words, KFC will be charged only on B2C Intra-State supplies made by taxable person registered in Kerala excluding composition dealer.
- Whether credit of KFC will be allowed?
KFC is payable on supply of goods and services by registered person to un-registered person hence question of the credit availability do not arise. In other words, KFC is not changeable on supplies made by one registered to another registered person and hence there is no question of allowing credit of KFC charged.
9. What is the rate at which KFC to be levied?
There are multiple rates of KFC. Refer below table,
|Nature of Goods||Rate of Levy|
|Goods taxable @ 3% GST||0.25%|
|Goods taxable @ 5% GST||Nil|
|Goods taxable @ 12% GST||1%|
|Goods taxable @ 18% GST||1%|
|Goods taxable @ 28% GST||1%|
|All taxable Services||1%|
10. What is value on which KFC to be charged and collected?
The provision of finance bill clearly states that the levy will be collected on the value as determined under Section 15 of the GST Act, 2017 i.e. in other words, the levy will be collected on the value on which GST is payable by the taxable person.
11. Whether KFC needs to be separately disclosed on the invoice?
The Rule 3 of the Kerala Flood Cess Rules, 2019 clearly states that KFC collected needs to be separately disclosed in the invoice.
12. What is due date of payment of KFC?
Sub Clause 3 of the clause 14 of the Kerala Finance Bill, 2019 clearly states that KFC is payable in same manner as payment of GST is made under the Kerala GST Act, 2017. To simplify, the due date of payment of KFC will be 20th of the following month.
13. Whether there are any separate returns to be filed?
The Kerala Flood Cess Rules, 2019 mandates filing of monthly return in Form KFC-A. The due date for filing this return and payment of tax is 20th of the following month.
14. Whether KFC-A returns needs to be filed on GST portal?
There is no provision for filing of KFC-A return on GST portal. The KFC-A return needs to be filed on the Kerala Tax Department portal which is www.keralataxes.gov.in.
15. Whether data of GST returns needs to be matched with KFC-A returns?
Rule 5 of the Kerala Flood Cess Rules, 2019 states that the details of outward supplies reported in GSTR-1 should match with the details reported in KFC-A return. In other words, details of B2C supplies made the registered taxable person should be matching with the details filed under KFC-A.
16. Whether KFC is leviable on export of goods and services?
KFC is payable on the intra-state supplies and exports being inter state supplies, KFC is not leviable on export of goods and services.
17. Whether KFC is leviable on supplies to SEZ Unit and Developers within the State?
KFC is payable on the intra-state supplies, as supplies to SEZ is categories as inter-state supplies, , KFC is not leviable on supply of goods and services to SEZ developer or units.
18. Whether there will be any interest for delayed by the KFC?
Clause 4 of the Kerala Finance Bill, 2019 clearly states that provision of Kerala GST Act, 2017 will be applicable w.r.t. interest. In other words, delayed payment of KFC will attract interest @ 18% from the due date of payment till actual date of payment.
19. Which records the tax payer needs to be maintained?
Clause 4 of the Kerala Finance Bill, 2019 clearly states that provision of Kerala GST Act, 2017 related to definitions, authorities, assessment, audits, non-levy, short-levy, interest, appeals, recovery of tax, offences and penalties shall be applicable to levy and collection of KFC.
One may say that by introduction of Kerala Flood Cess, there is departure from the “One Nation One Tax” motto. But considering the enormity of the devastation there has to mechanism for raising the revenues. Hope these cesses do not become regular feature of Indian indirect tax system.