Tax sops for green buildings, electric vehicles

Tax concessions on environmental-friendly buildings, reducing Value Added Tax (VAT) on Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG) from 14.5% to 5% and a reduction of 50% in motor vehicle tax for newly registered electric vehicles for five years have been mooted in the 2021-2022 Budget presented by Finance Minister T.M. Thomas Isaac on Friday.

In a bid to attract investors to the State, the 10% electricity duty on electricity charges will be exempted for new industrial investments for five years.

The stamp duty on sale deed and registration fee for industrial parks run by KSIDC, KINFRA, SIDCO, DIC, other special purpose vehicles formed by the government for development of industries, related plots, sheds, lease deeds, lease cum sale, sub-lease and absolute sale deeds has been reduced to 4% and 1% respectively. A revenue loss of ₹25 crore is expected, the Minister said.

The amnesty scheme implemented last year for VAT arrears will this year also. The scheme will be applicable for tax arrears under KVAT, CST, Luxury Tax, arrears under Surcharge Act and Kerala Agriculture Income Tax Act.

If the arrears under this scheme are paid in lumpsum, 40% reduction in tax will be allowed. For those who opt to pay in instalments, the reduction will be 30%. Options shall be filed before August 31, 2021. All other conditions of the present scheme will continue. Loss-making public sector undertakings of the State government who opt for the amnesty will be provided with a special loan scheme to clear the tax arrears.

The Minister said the present 14.5% VAT on CNG/LNG is an impediment to new investments and for the development of public sector undertakings like FACT and BPCL. Reducing VAT to 5% at par with Tamil Nadu will be beneficial to the City Gas projects and domestic consumers. A revenue loss of ₹166 crore is expected, Dr. Isaac said.

Bar hotels which were closed as per the government policy and obtained licence subsequently could not file returns for the relevant period due to software-related issues. There were complaints on exorbitant sums on account of tax and penalty. Complete reduction in penalty and 50% reduction in interest were allowed. The option should be filed before June 30, 2021 and the arrears should be paid before July 31, 2021.

The Minister said complaints had arisen of digital money lending platforms, including mobile apps, charging exorbitant interest. To curb these activities, stringent measures are being contemplated and the Kerala Money Lenders Act, 1958 will be amended.

The motor vehicle tax on vehicles registered in the name of institutions engaged in palliative care and used exclusively for palliative care will be exempted based on recommendations of the District Collector.

Motor cabs and tourist motor cabs registered from April 1, 2014 and had remitted the five-year tax in lieu of 15-year one-time tax based on orders of High Court have to remit the balance tax and interest. Dr. Isaac said these arrears will be permitted to be remitted in ten bi-monthly instalments before March 31, 2021.

Flood cess on GST

The Minister said GST, though implemented with great expectations, has not yielded the desired revenue growth. The Kerala Flood Cess levied at 1% on GST implemented in the backdrop of the 2018 floods will be over by July 2021 and it will not be levied further.

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