GST Council’s GoM for Revenue Mobilisation

March 8, 2025

Recently, the GST Council established a Group of Ministers (GoM) to propose strategies for revenue mobilisation during natural calamities. This decision followed a meeting on December 21, 2024, where the need for a structured response to disasters was brought into light. The GoM will focus on creating uniform policies for levying a special calamity cess.

Formation of the GoM

The GoM is led by Uttar Pradesh’s Finance Minister Suresh Khanna. Other members include finance ministers from Assam, Chhattisgarh, Gujarat, Kerala, Uttarakhand, and West Bengal. Their collective expertise aims to address financial challenges posed by natural disasters.

Terms of Reference (ToR)

The ToR includes seven critical issues. The GoM will evaluate the legal framework for a special cess. It will consider whether this cess should apply to specific sectors or be more broadly implemented. Additionally, it will assess whether the cess should cover B2B or B2C transactions or both.

Framework for Natural Calamities

The GoM is tasked with developing a framework to classify events as natural calamities. This classification will guide the application of the special cess under the GST regime. The framework aims to ensure clarity and consistency in revenue generation during crises.

Recommendations on Rate Structure

The group will recommend the rate structure for the calamity cess. They will also determine the duration for which this cess should be in effect. This approach seeks to balance immediate financial needs with long-term economic stability.

Alternate Mechanisms for Support

The GoM will explore alternative mechanisms to assist states during disasters. This investigation aims to provide financial support without disrupting the foundational structure of the GST system. The goal is to ensure that states can respond effectively to emergencies.

Previous Experiences and Context

The GST law allows for special taxes during disasters. In 2018, a similar GoM was formed to address Kerala’s needs after severe flooding. In 2019, Kerala was permitted to levy a 1 per cent calamity cess for two years to fund rehabilitation efforts. This precedent informs the current GoM’s deliberations.

Reconstitution of the Revenue Analysis GoM

Alongside the calamity GoM, the GST Council reconstituted another GoM to analyse GST revenue. This group, led by Goa’s Chief Minister Pramod Sawant, comprises finance ministers from various states. Their focus is on sector-specific policy interventions and strategies to combat tax evasion.

Analysis of Revenue Collection Trends

The reconstituted GoM will examine state-wise revenue collection trends. They aim to identify patterns across sectors and regions. This analysis will inform future policy decisions and enhance revenue efficiency.

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