The Hindu : Kerala / Thiruvananthapuram News : Sops for ATF to go: Isaac

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Friday, Jun 27, 2008
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Kerala - Thiruvananthapuram

Sops for ATF to go: Isaac

Special Correspondent

Sales Tax to be restored to 25 per cent

State registered tax buoyancy: Isaac
Tribunal to handle pending Sales Tax cases

Finance Minister T.M. Thomas Isaac

Thiruvananthapuram: Finance Minister T.M. Thomas Isaac on Thursday informed the Assembly that he proposes to withdraw the sales tax concessions for aviation turbine fuel (ATF) announced in the budget and restore it to the previous level of 25 per cent.

The Minister also announced a slew of measures to capitalise on the tax buoyancy, including the introduction of an integrated process of scrutiny and audit of tax returns, strengthening of the information and intelligence systems and a tribunal to replace the Sales Tax Appellate Authority and reallocation of work. He ruled out foregoing yet again sales tax on petroleum products.

Replying to a debate on the demands for grants for agriculture income tax, sales tax and land revenue in the Assembly, Dr. Isaac said that the end of the entry tax regime had an adverse effect on revenue but he was satisfied with the outcome of a series of steps as a result of which the State witnessed a tax buoyancy of 20 per cent in April and 24 per cent in May.

He said scrutiny officials in the Taxes Department would audit tax returns and deputy commissioners’ offices would be opened in three districts.

The scrutiny process would be two pronged with emphasis on technical scrutiny on the basis of several parameters including tax payers’ past records and current sales trends.

This integrated process would reduce some cumbersome procedures. The department was considering the possibilities of appointing information managers under the new information system management he proposed to install.

Apart from strengthening the intelligence system, the proposed tribunal would be sufficient to handle the pending sales tax cases. He proposed to appoint 28 audit officers to clear 18,000 appeal cases that had locked in Rs.3,500 crore.

He was confident that these cases could be cleared within four months, leaving the undecided ones to the proposed tribunal, which would have a judicial officer as one of the members.

His proposal to set up luxury tax circles would improve tax collections from the tourism sector which stood at Rs.240 crore.

The department would collect details of resorts, ayurveda treatment centres and hospitals and hotels from their websites while preparing data on the taxes they paid to the exchequer.

Dr. Isaac countered a few Congress members’ plea for a further reduction of sales tax on petroleum products by citing the Congress-ruled States of Andhra Pradesh and Maharashtra that did not reduce tax rates to reduce the impact of the price hike of petroleum products.

He insisted that the Plan priorities had not changed despite hefty cuts in Plan size during the last few years. In 2006-07, the cut was Rs.1,425 crore, of which external aided projects and few power projects accounted for Rs.1,325 crore. At one point of time, the Finance Minister and the Opposition members got engaged in arguments related to the government’s failure to recover the alleged Rs.8,000-crore arrears from online lottery companies.

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