The Kerala government will levy 1% flood cess on goods and services transacted within the state from Thursday, The Hindu reported. More than 483 people were killed, several lakhs were displaced and property worth more than Rs 30,000 crore damaged in one of the state’s worst-ever floods last year.

The proceeds from the cess will be used to fund post-flood rebuilding projects. The GST council had allowed the state to go ahead with the implementation of the cess. It will be implemented for two years from August 1.

Advertisement

Items which fall under 5% GST tax bracket are exempted from the flood cess. Traders who have opted for composition tax also have been excluded from it. Additionally, hotel food, air conditioned train and bus ticket booking have also been exempted, Mathrubhumi reported.

The cess will be implemented for items which fall under the GST slab of 12% or above, NDTV reported.

“It has taken us almost a year to work out a special cess within the framework of GST,” Finance Minister Thomas Isaac told NDTV. “The delay is understandable because it’s for the first time that the GST council is giving permission to a state government to have an additional cess, apart from GST.”

Advertisement

Isaac said expenditure shot up with the big natural disaster. “How do we meet this expenditure? There must be some maneuverability for the state government,” he added.

Issac said that they expect to collect around Rs 700 crore in one year. He said the funds will be used to finance the construction activities for flood affected roads and even village roads in general.

However, the Opposition criticised the decision and called this a challenge to people. Leader of the Opposition Ramesh Chennithala said it amounted to a double punishment for the people who could not still come out of the damages caused by the flood. He said this would trigger inflation and impose an additional burden of Rs 1,200 crore on the people.