Ministerial panel to study need for disaster levy in GST


Mains Paper 3: Environment | Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level: Not Much.

Mains level: Policy measures to mitigate disaster incurred losses.



  1. The Union Government set up a ministerial panel to study the legality of imposing a “disaster levy” to raise funds for states struck by natural calamities, such as the recent floods in Kerala.
  2. Following the floods, Kerala had suggested a 10% cess on the state component of the GST.

Tasks of the Panel

  1. The group of ministers will look into several issues, including the possibility of a pan-India levy or state-specific tax, and whether the tax will be levied on all items or sin and luxury goods.
  2. The panel will also decide on the scale of disaster, which would require funds in addition to what is provided under the national disaster relief fund (NDRF).
  3. The committee will have representation from north-eastern states, coastal states and hill states, which are prone to natural calamities.
  4. The Constitution amendment brought in to facilitate GST’s rollout has a provision that in the event of a natural calamity, a special rate can be imposed with the permission of the GST Council.

Questioning the viability

  1. Some experts, however, did not favour changes in the GST architecture to raise resources for dealing with natural calamities.
  2. The introduction of any cess either at the national level or at the state level should be avoided so as it would make the entire GST process, including the invoicing and return filings, much more complex for all businesses.
Disasters and Disaster Management – Sendai Framework, Floods, Cyclones, etc.
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