FM Nirmala Sitharaman announces GoM to evaluate disaster management cess

The Union Finance Minister Nirmala Sitharaman on Saturday (December 21) said the GST Council has decided to task a Group of Ministers (GoM) with examining the introduction of a cess for funding disaster management.

The GoM will include representatives from Uttar Pradesh, Andhra Pradesh, West Bengal, Telangana, and other states.

The GoM will explore whether all state-level disasters, such as floods and droughts, should attract such a cess. States expressed varying views on the proposal, with some advocating for a cess specific to flooding or drought. Given the diverse perspectives, the GoM will now look into these issues comprehensively, Sitharaman said.

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Also, Andhra Pradesh Finance Minister Payyavula Keshav said that there was a consensus that a GoM be formed. “The cess will be on luxury items and state-specific levy,” Keshav said. In September-October, Andhra Pradesh was hit by floods.

“To give us leverage to come back to normalcy, we have suggested a 1% cess. There was a general consensus to set up GoM,” Keshav said. The GST law provides for a levy of special taxes for a specified period to raise additional resources during any natural calamity or disaster.

Earlier in 2018, the GST Council had decided to set up a GoM to look into similar demands made by Kerala. The GoM in January 2019 decided to approve the levy of 1% ‘calamity cess’ by Kerala for a period of two years to fund rehabilitation work in the state hit by floods. The goods and services that faced the 1 per cent cess were decided by Kerala.