The Hindu Business Line : Kerala announces sales tax relief on select items

THE State Government has announced sales tax exemption and tax reduction for select items in the modified Finance Bill, 2004, which was passed by the State Assembly on Monday.

While introducing the Finance Bill as reported by the Subject Committee, the Finance Minister, Mr K. Sankaranarayanan, said hand-made soaps and agarbathis would be exempted from sales tax in order to encourage small and tiny industries and thereby create more employment opportunities in the State.

The Minister also exempted ginger from sale tax and Central sales tax taking into account the grave problems faced by farmers in Wayanad and other parts of the State.

He said the original Finance Bill had proposed introduction of tax on 21 new items in two phases in an effort to increase revenue. But the Subject Committee had noted that the proposal did not have any relevance in view of the value-added tax being introduced from April next year and hence need not be given effect. The Government has accepted the committee's recommendation.

The Government has also exempted registered khadi and village industries with a sales turnover of up to Rs 50 lakh from paying sales tax.

The Minister announced reduction in sales tax from eight per cent to four per cent on buttermilk and biscuits produced within the State. Similarly, the sales tax on sprinklers used for irrigation in plantations has been brought down to four per cent.

The Minister said that a situation had been created whereby sales tax had been levied on the last sale of partially processed rubber such as rubber sheet, crumb rubber and scrap rubber as also on the purchase of latex for partial processing. This was due to legal problems and though the Budget had proposed exemption from paying tax arrears in this respect up to October 2001, the situation had continued unresolved.

In view of this, the Government would bring in the necessary amendments to relevant clauses in the sales tax laws to alter the situation, he said.

Again due to certain legal issues, pasteurised milk had been subjected to sales tax for a certain period even though the State has till date not imposed the tax on the commodity. The Government has now exempted the milk producers from paying the tax for the given period.

The Government will also simplify the procedure for registration of small hospitals and clinics under sales tax laws. Besides, they will be required to file the returns only once in six months.