The Hindu : Front Page : Tax rates slashed for select items

Online edition of India's National Newspaper
Wednesday, Oct 18, 2006
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Tax rates slashed for select items

Special Correspondent

Chicken and tread rubber removed from the list of notified goods

T.M. Thomas Isaac announces fresh tax concessions.

THIRUVANANTHAPURAM: Finance Minister T.M. Thomas Isaac announced certain fresh concessions on the Budget proposals relating to luxury tax, entry tax and value added tax (VAT) in the State Assembly on Tuesday.

Accordingly, the luxury tax on hotel rooms with daily rents below Rs.150 stands withdrawn. Rooms with rents ranging from Rs.150 to Rs.499 will carry luxury tax at the rate of 10 per cent and those with from Rs.500 and above, 15 per cent.

The luxury tax on cable TV will be Rs.5 per connection, instead of the proposed 5 per cent of the amount charged on the customers by the operators. Hotels will not have the facility to compound their tax returns.

Dr. Isaac slashed the compounding fee for houseboats by 50 per cent from the rates proposed in the Budget. The new annual compounding rates are: Rs.10,000 for one-bedroom houseboats, Rs.15,000 for houseboats having two or more bedrooms, Rs.17,500 for one-bed air-conditioned houseboat and Rs.25,000 for houseboats with two or more air-conditioned bedrooms.

He said that in Alappuzha district, considering the prevailing `special situation' [cancellation of tourist bookings due to fears about the viral fever chikungunya], houseboats would be exempted from luxury tax for the current year.

Dried ginger, tender areca nut, chicken and tread rubber are being removed from the list of notified goods under the Kerala Value Added Tax Act of 2003. Contractors doing the works of the Kerala Water Authority too will receive relief from payment of tax on material purchases made from unregistered dealers. Manufacturers in general are getting the facility of input tax credit under VAT. Pharmaceutical manufacturers were outside this clause since they are getting the facility of compounding their tax returns. Dr. Isaac said they too would get input tax credit.

Purchase tax exemption on rubber in the case of manufacturers who transfer their goods out of the State is being withdrawn. Live chicken and timber purchased from outside the State for sale within the State will not get entry tax refund from now on. The rate for compounding tax for 2007-08 in the case of gold dealers who opt for compounding facility will be 115 per cent of the compounded tax paid in 2006-07.

Dr. Isaac made the proposals as the Assembly referred the Kerala Finance Bill, 2006 to the Subject Committee.

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