The Hindu Business Line : Tax regime restructured in Kerala Budget

THE State Budget for 2004-05 has proposed changes in the rates of agricultural income tax. In the case of individuals (other than a company or cooperative societies), there will not be any tax for income not exceeding Rs 40,000.

For income above Rs 40,000 and up to Rs 60,000, the rate will be 10 per cent of the amount exceeding the exemption level. The rate will go up to Rs 2,000 plus 20 per cent for income between Rs 60,000 and Rs one lakh and Rs 10,000 and 30 per cent for income above Rs one lakh.

In the case of a firm, the rate will be 35 per cent of the total agricultural income. For a domestic company or a cooperative society, the highest rate is 50 per cent for income exceeding Rs three lakh, while for a foreign company, the rate will be 80 per cent of the total income.

In order to improve tax compliance by jewellery dealers, the budget has proposed revising of the compounding rate to 130 per cent. The rate of tax on bullion and spices will be reduced to one per cent so as to bring it on par with the neighbouring States. Besides, sale of cooked food in aircraft, ships and steamers will be made liable to tax.

Another proposal is to increase the rate of tax on white kerosene to 24 per cent to bring it on par with the tax on diesel.

This has been done in view of the adulteration of diesel with white kerosene and the higher tax on kerosene is expected to discourage the practice.

The units under the khadi and village industries registered with the competent authority will be exempted from tax, provided the annual sales turnover does not exceed Rs 25 lakh. Also, the reduced rate of four per cent tax for the cashew industry will be extended till March 31, 2005.

The exhibitions, prize schemes and exchanges melas being organised in the State will be required to obtain permission from the assessing authorities, for which a nominal fee of Rs 500 will be charged. The dealers will also have to furnish the details of turnover of such schemes separately along with their returns.

With a view to promoting the production of milk within the State, the budget has proposed levying of three per cent entry tax on the commodity. The cooperative societies will be exempted from sales tax for the milk sold within the State.

The import of LSHS, furnace oil and other heavy ends of crude distillates by public sector oil companies into the State will be exempted from entry tax with effect from April 1, 2002. This will be subject to the condition that these commodities were imported for resale within the State.

The other reliefs proposed include reduction of tax from 12 per cent to four per cent on blood bags and on firewood used by small scale units, cut in the rate of compound tax on primary stone crushers to 50 per cent of the existing rate and reduction in luxury tax on non air-conditioned rooms of rent above Rs 500 per day from 15 per cent to 10 per cent.