Any proposal of introducing a calamity cess on Goods and Services Tax (GST) during COVID-19 pandemic would be adversity in itself, a senior government official said. “Any such proposal would prove to be counter-productive as – at this time of lockdown with varying degrees across the country – sales are already at a low volume. The industry is already facing a deep crisis for want of demand and likely labour challenges that might come in the near future due to COVID-19 pandemic.” the official said.
Tinkering with the taxes or cess would not be a prudent option at this point. The official said that any such measure would further dampen consumer sentiments and could weaken market strength. “Experts are of the view that in the present circumstances, taxes and cesses should remain as it is without any undue interference,” the official said.
The official said that there would not be any long-term gains out of this measure. It was reported that the central government was considering a calamity cess on GST to tide over the economic crisis triggered by the coronavirus pandemic. Reportedly, a proposal to raise additional revenue from GST, excluding goods and services in the five percent slab, was being considered by the finance ministry. In April, in a bid to provide relief to states amid the coronavirus outbreak, the finance ministry has released about Rs 34,000 crore in two phases to states as a compensation for their revenue loss in the GST regime.
With the release of Rs 14,103 crore to states, the Centre paid a total of Rs 34,053 crore pending GST compensation cess for October and November. The first tranche of Rs 19,950 crore for the period was already paid on February 17. The finance ministry is also looking at the pending dues of states for December and January which would be released soon in phases. The government has released close to Rs 1.35 lakh crore to states and union territories towards GST compensation cess.