The Kerala government will impose an additional cess of 1% on goods and services with GST slab above 5% from June 1. This additional cess is meant to raise funds to rebuild the state, which was struck by devastating floods in August 2018. The flood cess will be imposed for two years starting from June 1.

Cess has not been imposed on all items but only on those goods and services with a GST slab above 5%. The cess will not be applicable on railway services, movie tickets, reports Mathrubhumi.

With the imposition of this additional cess, the government is expecting to raise Rs 600 crore annually. The funds raised will be added to the Chief Minister’s Distress Relief Fund and to the re-routed loan amounts from international financial agencies like World Bank and Asian Development Bank (ADB) for financing Rebuild Kerala projects, says Times of India report.

As per the report, Kerala is the first state to impose additional cess on GST after it was implemented. 

To make the impact of cess minimal, the state government has decided not to impose the additional tax on products sold by small traders, who have an annual turnover of less than Rs 1.5 crore. Importantly, the cess will be applicable only on transactions within Kerala and not interstate transactions.

The government has also decided to levy 0.25% as flood cess on gold and silver.

The GST Council has also approved the state government’s request to levy flood cess for two years. The plan to impose additional cess was first announced in the state’s financial budget. As per the initial plan, the cess was to be implemented from April 1, but it was put on hold due to Lok Sabha elections.