The Kerala flood cess is a new tax for businesses in India and the rules that govern it have been implemented starting with the 1st of August 2019. But what does this tax mean and who does it apply to?
The Kerala flood cess is a tax implemented by the Kerala government on intra-state movement of goods and services to the final customers. The tax is applicable from the beginning of August 2019 and will be applied for 2 years, till July 2021. The Kerala flood cess has been established to raise the funds required for relief and rehabilitation of those affected by last year’s flood in the state.
The cess is applied to the local outward supplies (INTRA-STATE outward supplies) to B2C customers, the final customer that is not registered under GST or unregistered persons by all taxpayers who are registered under the Kerala GST Act, with the exception of composition taxpayers.
The Kerala flood cess, KFC for short, will be imposed at a rate of 1% on the value of supply of goods, services or both that fall under Schedule II, III & IV or SRO.No.360/2017 Dt.30.06.2017. In case the goods fall under the Fifth Schedule of SRO.No.360/2017, such as gold, diamonds etc, the Kerala Flood cess will be applied at the rate of 0.25%.
Composition taxpayers are exempted from the Kerala Flood Cess. This includes taxpayers who have opted for composition for services as per Section 14(1)(i) of Finance Act,2019. The goods, services or both, that are susceptible to the Kerala Flood Cess are described in Sec.14(2) of the Kerala Finance Act, 2019. All goods, services or both, that are not covered in the mentioned Section will be exempted from levy of Kerala Flood Cess. Dealers of exempted goods and services do not carry the levy of the Kerala flood cess. Transactions between registered persons to further their business are exempted from the Kerala Flood Cess. If a supply is made to an unregistered taxpayer, the Flood Cess has to be levied. If the supply is made to a registered person but not in furtherance of business, the Flood Cess needs to be levied.
The flood cess in Kerala is calculated on the value of the supply. This means that CGST and SGST are not included in the value of supply. Let’s see the following example of an invoice with the flood cess on it. The value of the goods supplied is Rs. 1000. The GST rate is 12%. CGST is Rs. 60 and SGST is Rs. 60. The flood CESS is 1% and will have a value of Rs. 10. The total of your invoice will be Rs. 1130 only.
First of all, take into account the rules discussed in the articles. Second, if your business is registered in Kerala and you have added this state in your company profile in Sleek Bill, you will see or have already seen the following screen:
Sleek Bill automatically detects your state and to help you make the correct invoices with no stress, it is recommended to activate the option of showing the Kerala Flood Cess on your invoices. Don’t worry, you can always deactivate this option from your General Settings. Ok, so let's make an invoice for an unregistered client from Kerala who buys 10 crates of Spanish Apples from your GST registered company in Kerala.
You Create a New Tax Invoice as usual, with just the click of 1 Button, from your own dashboard. In the invoice, select the Kerala Client you are making the bill for. NOW, to apply the Kerala Flood Cess, Scroll down to the bottom of the page and tick the box that says “Activate Kerala 1% Cess”, as shown in the picture.
Now add your product(s) to the invoice as you would with other invoices. In the case of our example, we have added the 10 crates of apples. As you can see, on your invoice after the CGST, SGST breakdown, you will see an entry for the Kerala Flood Cess of 1%. Sleek Bill calculates the correct amount of cess and total value and shows it on your invoice.
The process to apply the cess in Sleek Bill Desktop is similar to the one described above. If your company is from Kerala an option will appear when you Edit your Invoice and all you need to do is check the box for it and this cell will be applied.
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