Confusion cleared! Finance Ministry is not considering imposition of calamity cess on GST

After reports emerged saying that the central government is considering a calamity cess on the Goods and Services Tax, similar to flood cess imposed by Kerala in June last year, sources said that the Finance Ministry is not considering imposition of calamity cess on the GST as businesses are grappling with low sales and declining demand, as per a report in PTI. Ministry sources said that in the present economic scenario during the COVID-19 pandemic, any purported proposal of introducing a calamity cess would be nothing less than an adversity itself. This would prove to be counter-productive, as sales are already at low volume and the industry is facing a deep crisis for want of demand and likely labour challenges, a source said as per PTI.

"Any such measure would further dampen the consumers' sentiment and could weaken markets' strength, especially when the government is endeavouring its best to boost the consumption," the source said. Also internationally, no country has tried such imprudent fiddling with their existing tax regimes during COVID time. None of the countries, developed or developing, have increased taxes to counter economic impact of the pandemic, the source added.

Earlier, on Saturday, Finance Minister Nirmala Sitharaman in New Delhi said that every assumption made in the 2020-21 Union Budget, presented in February, would have to be reviewed in view of the coronavirus pandemic. "Every assumption made in the budget 2020 (2020-21) are at stage where unless I review them they are not going to hold good," the Finance Minister said.

In an interaction with Nalin Kohli, Bharatiya Janata Party national spokesperson, she said despite the unforeseen situation and fall in revenue, the central government had devolved in April and May every budgetary proportion allocated to the states.