The Hindu : Kerala / Thiruvananthapuram News : Government to exempt PSUs from retail surcharge

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Wednesday, Jul 23, 2008
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Kerala

Kerala - Thiruvananthapuram

Government to exempt PSUs from retail surcharge

Special Correspondent

State first in the country to impose such a levy, says Isaac

Government to issue necessary notification
Taxes Department to be recast

Thiruvananthapuram: Finance Minister T.M. Thomas Isaac on Tuesday said that the State government would exercise its exclusion rights to exempt public sector undertakings from the surcharge levied on retail monopolies.

Replying to the debate on the Kerala Finance Bill, 2008, Dr. Isaac said the government would issue notification to exempt several categories of traders from the purview of the levy.

He opposed the Opposition suggestion that the relevant provisions be included in the Finance Act itself and that a higher rate of levy be imposed. The government was cautious in its approach to this issue, he said.

The State had set a record of sorts by becoming the first in the country to impose a levy on monopoly retailers. He felt that the government should adopt a practical stand on this as there were several legal pitfalls that needed to be avoided.

Therefore the rate of surcharge had been restricted to 10 per cent lest it be interpreted as a prohibitive tax. Instead of listing each and every trade that would be exempted, it would be better to vest such powers with the State government which would issue the necessary notification in this regard.

The Finance Minister also justified the 0.5 per cent tax he proposed to levy on home stay of three rooms and above. This was a marginal tax and it was necessary to bring this category within the tax net, he said.

Clarifying Opposition queries on the utilisation of the cess on VAT, Dr. Isaac said the revenues from this would be utilised for expanding the scope of the proposed comprehensive health insurance scheme.

The revenues from the proposed hospital tax would also enable the State to subsidise the public health system. The tax had been brought in the context of the booming medical tourism sector where people could afford to pay a small tax.

The Finance Minister also brought in amendments relating to compounding for gold traders and remitting the tax on aviation turbine fuel that had been collected since April 1.

He said that the Taxes Department would also be reconstituted on the same lines as the Finance Department with delegation of powers and liberalisation of procedures.

Earlier, Opposition members, Aryadan Mohammed, K.C. Venugopal, K.Babu, N.Jayaraj and Kutty Ahmed Kutty, in their dissent note, said that the tax on each category of lotteries should be doubled and questioned the government’s diffidence in doing so.

They said that the government had proposed only a marginal increase in the tax on paper lotteries, which would work out to a negligible fraction of what the lottery promoter could actually pay.

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