Finance Ministry sources on Saturday dismissed media reports claiming the government would impose calamity cess on Goods and Services Tax (GST) to raise additional resources for dealing with the COVID-19 pandemic. Denying categorically any such supposed proposal was under consideration, Finance Ministry sources said that in the present economic scenario, a calamity cess would be nothing less than an adversity itself.
Some media reports had claimed that the central government is considering a calamity cess on GST to tide over the economic crisis in the wake of COVID-19 pandemic.
Sources in Finance Ministry said that any such proposal would prove to be counter-productive as sales are already low amid lockdown. Industry is already facing a deep crisis due to low demand and shortage of labour. Therefore, tinkering with the taxes or cess would not be a prudent option at all. Any such measure would further dampen consumer sentiment and weaken markets' strength, especially when the Government wants to revive consumption.
Sources said that there would hardly be any long-term gains from such a cess. "Further, if we look at the well-established tax practices internationally, nowhere in the world in COVID pandemic such imprudent fiddling has even tried in any tax regimes including GST. None of the countries, developed or developing, have increased taxes to counter economic impacts of COVID-19," said a source on condition of anonymity.
India is under lockdown since March 24. On May 17, the Centre extended the fourth phase of nationwide lockdown till May 31 to stem the spread of coronavirus outbreak. In a bid to mitigate the economic impact of coronavirus-led lockdown, Prime Minister Narendra Modi on May 12 announced the Rs 20 lakh crore "Atma Nirbhar Bharat" economic stimulus, which is nearly 10 per cent of GDP.
By Chitranjan Kumar