The 55th GST Council meeting has agreed to formalise a process for states to impose a special cess aimed at raising funds for disaster relief. Andhra Pradesh had sought permission to levy a 1% cess on goods and services falling under the highest rate bracket of 28%. In response, the Council will refer the matter to a Group of Ministers (GoM), similar to a 2018 case involving Kerala. Finance Minister Nirmala Sitharaman highlighted the need for a structured approach to address such requests in the future, noting that drought should also be recognized as a disaster in this context.
Andhra Pradesh’s request stems from financial losses incurred due to heavy rainfall and flooding in August and September, which led to an estimated need for Rs 15,000 crore for recovery. The proposal garnered broad support from other states, reflecting a unified stance on the need for disaster-related funding mechanisms. However, the meeting concluded without making significant decisions on other key issues, such as reducing GST rates on health and life insurance premiums, which will require further deliberation.
Alongside the cess proposal, the Council announced changes to tax rates, including raising the GST rate from 12% to 18% on sales of all used vehicles, including electric cars, and subjecting caramelised popcorn to an 18% GST due to its classification as sugar confectionery.
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