The GST Council convened on Saturday and made a decision to establish a Group of Ministers (GoM) to evaluate the implementation of a 1 percent calamity cess proposed by Andhra Pradesh. This cess aims to tax certain luxury items as a means to generate funds for disaster relief efforts.
Andhra Pradesh’s Finance Minister, Payyavula Keshav, confirmed that there was a mutual agreement among council members to form the GoM. He explained that the cess would specifically target luxury goods and would be a state-specific tax measure.
Following significant flooding in Andhra Pradesh during September and October, Keshav emphasized the need for additional resources to support recovery efforts, highlighting that the proposed 1 percent cess would provide crucial financial support for restoring normalcy in the state. He noted that there was broad consensus on the necessity of setting up the GoM.
The GST framework allows for the imposition of special taxes for a limited duration to gather extra resources in response to natural disasters. In a similar instance in 2018, the GST council had previously established a GoM to address Kerala’s request for a calamity cess. This GoM approved a 1 percent cess for Kerala in January 2019 to fund rehabilitation for flood-affected areas, with the scope of goods subject to the cess determined by the state itself.
