Thiruvananthapuram: Kerala government eyes to garner Rs 1,200 crore for rebuilding flood-ravaged rural roads as a 1 per cent flood cess would be imposed on commodities in Kerala from Thursday (August 1).
The cess, which would be in effect for two years from August 1, 2019, would be applicable for 928 commodities with Goods and Services Tax (GST) rates of 12 per cent, 18 per cent and 28 per cent. However, it would not be applicable for essential items such as rice, salt, sugar, fruits and vegetables with a GST rate of 0 per cent and 5 per cent. There would not be any flood cess for commodities such as petrol, diesel, alcohol and land sale that are outside the purview of the GST.
There is no flood cess for these items that do not have GST or do not fall into the 5 per cent GST slab. Hotel food and bus/train tickets have been excluded from the flood cess. However, mobile phone recharge, and insurance premium, would have to bear the burden of the cess.
The 928 items that fall into the GST rates of 12 per cent, 18 per cent, and 28 per cent will have one per cent cess.
Car, bike, TV, refrigerator, washing machine, mobile phone, medicines, cement, and paint would turn costlier with the implementation of the flood cess. Gold and silver have a cess of 0.25 per cent. It is likely that as flood cess is only applicable in Kerala, people might head to other states to buy these items.
Low-priced commodities would only see a slight increase in rates. Merchants claim that they would incur huge losses if they do not implement cess on even very low-priced items. By forgoing even one per cent of the profit, they would suffer losses to the tune of lakhs of rupees, it was pointed out.
Several merchants and retailers have already set the new maximum retail price (MRP) after adding the cess for commodities to be sold in the state. This is even after Finance Minister Thomas Isaac's repeated appeals that those traders who did not reduce the price of commodities when the GST rates were reduced, needn't increase the rates when the flood cess is implemented.
The owner of a business chain in Thiruvananthapuram said that his shop would sell commodities in Kerala as per the revised MRP rates.
What you as the consumer needs to know:
• Ask for the bill, if GST or cess is being levied while purchasing items
• Check for which all items cess is being levied
• The cess should be levied only on the commodity and not on the GST
• Even with cess, money more than the MRP listed on the packet cannot be levied.
These items are to be costlier:
Frozen meat, butter, ghee, cool drinks, dosa-idli batter, cake, ice cream, chocolate, mineral water, condensed milk, sauce, jam, biscuit, cornflakes, umbrella, spoon, steel utensils, medicines, cloth materials above Rs 1,000, mobile phone, laptop, camera, CCTV, computer, washing machine, dishwasher, grinder, TV, AC, mixie, switch, refrigerator, microwave oven, tyre, air cooler, water heater, watch, clock, pressure cooker, car, motor cycle, fan, LED bulb, bathroom fittings, mike, spectacles, sandals, notebook, rain coat, shaving cream, bag, perfume, air freshener, shampoo, deodorant, tooth paste, lottery, hotel room bill, cinema ticket, phone bill, plywood, furniture, cement, paint, ceramic tile, marble, wiring cable, pipe, bed, exercise equipment, paan masala and cigarette, among others.
Relief funds
Economist Mary George said one reason why the Centre has allowed the state to collect an additional one per cent cess is because it could not provide the desired funds despite repeated requests to tide over the damages. The Centre had provided Rs 2,904 crore for the state.
"There is nothing wrong with this method but there should be strong checks and balances to ensure that this money solely goes for the purpose it is being collected for. Successive governments in Kerala in the past have seen funds being diverted for other needs and that should not happen," said George.
The World Bank itself estimated that Kerala suffered a loss of Rs 31,000 crore.
The floods, which began after heavy rains at the end of May last year and continued till mid-August, claimed 483 lives, and at the height of the deluge over 14.50 lakh people were displaced taking shelter in over 3,000 relief camps.
Soon after the floods, the Kerala government gave a call to all to contribute to the Chief Minister's Distress Relief Fund and through that the state was able to raise about Rs 4,016 crore, of which Rs 1,055 crore still remains unused.
Senior Congress legislator and former minister Thiruvanchoor Radhakrishnan however said that the Pinarayi Vijayan government was functioning in a strange way.
"This is a blow, especially to those lakhs of people who suffered during the floods. They are asked to suffer again as price of essential items are going to increase. Moreover, everyone wishes to get a statement of accounts on how much money was received and where all was it spent," he said.
