Calculating the Kerala Flood Cess on Sales Value

Introduction to Kerala Flood Cess

The Kerala Flood Cess is an additional tax levied on the value of supply to reduce the damages caused by floods in the state of Kerala. This cess is an essential part of the Kerala Goods and Services Tax (GST) rules, which are designed to ensure the value of supply for goods or services is accurate.

Understanding the Calculation Process

The Kerala Flood Cess is calculated based on the value of supply. However, it is important to note that the calculation excludes the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) from the value of supply. This ensures that the cess is levied only on the actual transaction value.

Example Calculation of Kerala Flood Cess

Let's consider an example to illustrate the calculation of the Kerala Flood Cess. If the value of supply is Rs. 100/- and the tax rate of the commodity is 12% GST, the invoice to be raised will be structured as follows:

Value of supply - Rs. 100/- CGST - Rs. 6/- SGST - Rs. 6/- Cess - Rs. 1/- Total sales value - Rs. 113/-

The detailed breakdown of the invoice:

Value of supply: Rs. 100 CGST at 6% (100 * 6/100) Rs. 6 SGST at 6% (100 * 6/100) Rs. 6 Kerala Flood Cess at 1% (100 * 1/100) Rs. 1 Total sales value: Rs. 113

Legal and Regulatory Basis of the Kerala Flood Cess

The Kerala Flood Cess is mandated under Rule 32A of the Kerala Goods and Services Tax Rules 2017, which was included in response to the Kerala Finance Bill 2019. Rule 32A explicitly clarifies the value of supply on which the cess is levied. As per this rule, 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.

Importance of Accurately Calculating the Value of Supply

Accurate calculation of the value of supply is crucial for adhering to the Gujarat GST Act and ensuring the correct application of the cess. Misinterpreting the value of supply can lead to penalties and legal issues, as well as financial discrepancies in accounting records.

Conclusion

Understanding and correctly calculating the Kerala Flood Cess on the value of supply is essential for businesses operating in the state of Kerala. By excluding the CGST and SGST, the cess ensures that it is levied only on the actual transaction value, thereby maintaining the transparency and integrity of the GST system.

References

For more detailed information, please refer to Rule 32A of the Kerala Goods and Services Tax Rules 2017 and the Kerala Finance Bill 2019.