Understanding Kerala Flood Cess Compliance: Filing, Penalties, and Key Steps

Introduction

The Kerala State Goods and Services Tax (SGST) Department has issued a Trade Circular urging all liable taxpayers to comply with the requirements for filing and payment of the Kerala Flood Cess. This guide outlines the regulations, penalties, and the detailed compliance process associated with the Kerala Flood Cess, applicable from August 1, 2019, to July 31, 2021.

Kerala Flood Cess: Key Facts

Purpose: Established to fund post-flood reconstruction efforts following the 2018 Kerala floods.
Levy Period: The cess was applicable from August 1, 2019, to July 31, 2021.
Applicability: Targets intra-state B2C supplies of goods and services in Kerala, excluding B2B transactions and composition scheme dealers.
Cess Rates:
- 0.25% for goods taxed at 1.5% SGST (primarily applicable to precious metals and jewellery).
- 1% for goods and services attracting SGST rates exceeding 2.5%.
Input Tax Credit: No Input Tax Credit (ITC) is available for the cess paid.
Refund Policy: Payments made are non-refundable, even in cases of inadvertent overpayment.

Compliance and Filing Instructions

1. Who Must File?

All GST-registered B2C suppliers in Kerala (excluding those under the composition scheme) who made taxable supplies during the levy period from August 1, 2019, to July 31, 2021.

2. How to File Kerala Flood Cess Return (Form KFC-A):

Registration: Register and log in at [keralataxes.gov.in].
Filing Returns: Submit monthly returns in Form KFC-A for the relevant period.
Data Accuracy: Ensure that all outward supply details correspond with those reported in GSTR-1.
Payment: Pay the cess amount due, including an 18% interest charge for any delays. Any shortfall must be addressed during the annual return filing with the applicable interest.

3. Payment for Assessments/Adjudications:

Payments should be made through the e-treasury portal of the Government of Kerala, not through the GST common portal or using Form GST DRC-03.

Penalties and Adjudication

Interest: A rate of 18% per annum will be charged on delayed payments.
Penalties: Equal to the unpaid cess amount, with provisions for revenue recovery actions.
Adjudication: Discrepancies related to the flood cess may be included in show-cause notices and adjudication orders by Kerala SGST officers.

Step-by-Step Guide: Filing Kerala Flood Cess Return (KFC-A)

Log In: Visit [keralataxes.gov.in] and log in with your credentials.
Access Form KFC-A: Go to the Kerala Flood Cess section and select Form KFC-A.
Input Details: Fill in all pertinent B2C supply information for the relevant period, ensuring congruity with GSTR-1.
Payment: Remit the cess amount due, factoring in any late payment interest.
Submission: Complete the filing before the due date for GSTR-3B for each month within the levy period.

FAQs on Kerala Flood Cess Compliance

Q: Is Kerala Flood Cess currently applicable?
A: No, it was effective only from August 1, 2019, to July 31, 2021; however, pending returns and payments must still be filed.
Q: What if I haven't filed or paid the cess?
A: It is necessary to file Form KFC-A and remit the due amount with 18% interest. Failure to comply may lead to penalties and recovery actions.
Q: Can I make payments through the GST common portal?
A: No, payments for assessments or adjudications must be processed via the Kerala e-treasury portal.
Q: Is it possible to claim a refund for excess payments on the Kerala Flood Cess?
A: No, refunds are not allowed for the Kerala Flood Cess.

Conclusion

Compliance with the Kerala Flood Cess remains essential as mandated by the Kerala SGST Department. Taxpayers are required to file Form KFC-A promptly, settle any outstanding cess with 18% interest, and resolve short payments during annual filings. Non-compliance can result in severe penalties and recovery actions. To ensure accurate compliance, always refer to the most recent Kerala SGST circulars and file returns punctually.