The ministerial panel under Bihar Deputy Chief Minister Sushil Modi will meet on October 15 to examine the modalities for revenue mobilisation by levying additional tax under the GST in case of natural calamities.
Following deliberations, the Council decided to constitute a seven-member Group of Ministers under Modi to look into the possibility of imposing a separate tax under the GST to help states hit by natural calamaties and also suggesting scenarios when this tax should be levied.
The panel would submit its report to the GST Council by October 31.
The panel would look into five issues flagged by the Council, including whether the new tax should be levied only in the state concerned or be an all-India levy, and whether it should be on specified luxury or sin goods only.
Besides, the grouping would look at whether National Disaster Response Fund (NDRF)/ State Disaster Response Fund (SRF) mechanism is sufficient to deal with calamities as well as define circumstances where the 'calamity tax' can be imposed.
Other issues such as the legal aspect of imposition of such a tax within the GST would also be looked at.
Last week, the apex court upheld the constitutional validity of the levy of 'Compensation to States' Cess saying it is an increment to GST which is permissible under the law.
PwC Indirect Tax Partner and Leader Pratik Jain said the judgement puts the ambiguity around legislative competence around levy of GST compensation cess to rest and has held that cess could also be applied in situations where Clean Energy Cess was already paid on coal.
"The timing of this decision is important, as the Government is now contemplating imposition of a special Cess to compensate the States in case of natural calamities," Jain said.
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