Kerala flood cess applicability on Goods and services

Kerala Flood Cess has been allied by confusions right from the beginning of its introduction. KFC had to and still is facing certain hurdles in its applicability and is undergoing amendments constantly.

Kerala Flood Cess is however not applicable to the following type of outward supplies:

All supplies made by composition dealers of goods and service
All supplies made between dealers registered under GST
All the local outward supplies of goods attracting:
• GST at 5%
• GST at 0.25%
All inter-state outward supplies of goods or services or both.
All type of exempt outward supplies

These rules coming under the Kerala Flood Cess (Third Amendment) Rules, 2019 has come in to force from 1st of August, 2019. Other than above mentioned implications, there certain other facts that needs to be noted about KFC. KFC shall be levied separately on the taxable value of supplies and is to be shown separately in invoice in addition to KGST and CGST. The collected KFC is to be paid to the government on a monthly basis by filing separate E-form KFC-A in the government web portal. Another regulation surrounding KFC is that once paid, it is never refundable.

The latest amendment that is merged in KFC as suggested by the Central Government is mentioned below:

[To be Published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]

Government of India

Ministry of Finance

(Department of Revenue)

Central Board of Indirect Taxes and Customs

Notification No. 31/219-Central Tax

New Delhi, the 28th June, 2019

G.S.R…… (E). – In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act 2017 (12 of 2017), the Central Government hereby makes the following rules further to amend the Central Goods and Services Tax rules, 2017, namely:-

4. In the said rules, after rule 32, with effect from the 1st day of July, 2019, the following rule shall be inserted, namely:-

“32A. Value of Supply in cases where Kerala Flood Cess is applicable: - The value of supply of goods or services or both on which Kerala Flood Cess is levied under clause 14 of the Kerala Finance Bill, 2019 shall be deemed to be the value determined in terms of section 15 of the Act, but shall not include the said cess.”

You will notice ‘Section 15’ mentioned in the amendment which actually implies that Kerala cess should be included in the value of supply for the purpose of levy of CGST and SGST. But once this amendment is functional, the value of goods purchased shall be determined as per the terms in Section 15, only the said cess shall not be included. Stated below is the comparative briefing of the particulars in the three phases of KFC namely:

Amount without KFC
Amount after prevailing KFC laws
Amount after the latest KFC amendment

Particulars	Amount without KFC	Amount after prevailing KFC laws	Amount after the latest KFC amendment
Taxable Value (assumed)	1000	1000	1000
KFC @1%	–	10	10
Taxable value for GST	1000	1010	1000
CGST @9%	90	90.90	90
SGST @9%	90	90.90	90
Total Cost	1180.00	1191.18	1190.00