What is Kerala Flood Cess?

In view of the floods that affected Kerala in August 2018, the Government of Kerala has decided to collect a Kerala Flood Cess of 1% or 0.25% on the sale of goods and services for two years, starting from 1 August 2019 till 31 July 2021. The money collected through this cess will be used for rebuilding the state.

Kerala Flood Cess must be applied on the goods or services in the following manner:

Supply Type Applicable Cess
Taxable supplies at 1.5% SGST 0.25%
Taxable supplies at 6%, 9% and 14% SGST 1%

Latest Update on Collecting Kerala Flood Cess

As announced by the Government of Kerala’s Sales Tax Commissioner, you can stop collecting Kerala Flood Cess from 1 August 2021.

If you had configured Kerala Flood Cess in recurring invoices, edit the recurring invoice and remove the KFC tax group from the Tax section so that it won’t be applied on child invoices that are created on or after 1 August 2021.

When you create quotes, sales orders, or invoices on or after 1 August 2021, you don’t have to choose the tax group with KFC. Instead, select the tax group that only has CGST and SGST.

Who should collect the cess and from whom?

GST registered persons must collect the cess on the sale of goods or services to unregistered persons within Kerala i.e. only on intra-state B2C transactions. Also, they must collect cess while making an intra-state supply of goods or services to other GST registered persons if the sold goods or services will not be used for business purposes.

Note: This cess will not be applicable to businesses that are in the composition scheme.

How do I set up the Kerala Flood Cess in Zoho Books?

You can configure taxes in Zoho Books so that the cess is applied on the sale of goods or services to unregistered persons within Kerala. Here’s how:

If you are yet to create KFC:

Create new tax rates as Kerala Flood Cess with its rate as 0.25% and 1%.

  • Go to Settings > Taxes > Tax Rates.
  • Click + New Tax and enter a tax name for the cess. (For example, Kerala Flood Cess @ 1%.)
  • Enter the rate as 1%.
  • Select the tax type as Cess.
  • Check the option This is Kerala Flood Cess.
  • Click Save.
Creating Kerala Flood Cess

Once you’ve created the KFC, the new tax groups that contains the cess and the GST rates will be automatically created.

If you have created KFC already:

Edit the KFC and check the option This is Kerala Flood Cess so that the transactions that have the cess applied on them is included in their respective returns.

  • Go to Settings > Taxes > Tax Rates.
  • Hover over the KFC tax rate and click Edit.
  • Check the option This is Kerala Flood Cess.
  • Click Save.

The tax groups that you had created which included the KFC will be automatically updated as a KFC tax group.

Now, when you make a sale of goods or services to an unregistered person, you can select the corresponding tax group from the dropdown and apply it to the line item.

If your business mostly supplies goods or services to unregistered persons within Kerala, you can set these tax groups as the default tax rates for your items and they will be applied automatically when you create a transaction.

How do I file the cess return?

You (a taxable person or business who has collected the cess) must file a monthly return in Form No. KFC-A on or before the due date for filing the GSTR-3B return. The cess return must contain all the details of the sale of goods or services that attract the Kerala Flood Cess. You can find these details in the KFC-A Summary report in the Reports module and use the information to file the cess return. Here’s how:

  • Log in to your Zoho Books organisation in another tab.
  • Go to the Reports module in the left sidebar.
  • Click KFC-A Summary report under Taxes.
Creating Kerala Flood Cess

Next, you can go to the Kerala Government’s tax filing website and use the details in KFC-A Summary report to file your monthly cess return.

The cess you had collected must be paid along with this return. Also, the details of sales mentioned in this return must match with the details of sales that will be in GSTR-1. Follow the steps provided by the Government of Kerala to complete filing the return.

Note: There will be no refund of the cess you pay along with the return.

Is interest applicable on delayed payment of Kerala Flood Cess?

Yes, you will have to pay interest at 18% on the delayed payment of Kerala Flood Cess as per the provision under Kerala Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017.

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