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Update: Kerala State Budget 2021-22

On January 15, 2021, Kerala’s state finance minister Dr. T. M. Thomas Issac presented Kerala State Budget for the year 2021-22. key tax highlights of the budget are as follows:

Goods and services tax

The following are proposed in the budget speech under Tax Payer Services:

  • Kerala Flood Cess – The period of Kerala Flood Cess levied at 1% on GST implemented in the backdrop of the 2018 floods will be over by July 2021. This cess will not be levied further.
  • Restructuring of the GST Department – The State G.S.T Department will be restructured by having separate wings for Tax Payer Services, Audit, Enforcement and Intelligence.
  • E-Office – The e-office system will be implemented in all offices. The e-office system facilitates timely services to the tax payers and dealers by accurately tracking action taken on their representations. With the implementation of e-office paperless office and internet based file movements will become a reality. This will facilitate the implementation of faceless return scrutiny similar to practices implemented in Income Tax and Customs Department.
  • Surveillance Cameras – The enforcement vehicles of the State G.S.T Department will be fitted with cameras and the inspecting officers will be given body worn cameras. This will ensure transparency and efficiency in the department activities.
  • Tax Payer Report Card – All tax payers will be issued with Tax Payer Report Cards. This will help the tax payer in obtaining prompt and efficient tax payer services. This can be used by the financial institutions and banks as credit rating criteria.
  • Review Mechanism – The review mechanism under G.S.T. Law will be strengthened. By doing review of incorrect adjudications, accuracy in tax adjudication can be ensured.
  • Court Fee for Appeals – Additional court fee is not leviable for G.S.T. appeals filed by the tax payers under Central G.S.T authorities. But 1% additional court fee exists for G.S.T. appeals filed by the tax payers under the State G.S.T. authorities. To rectify this imbalance, a limit will be fixed for the additional court fee for appeals filed by tax payers under the State G.S.T. authorities.
  • Public Relations – To create awareness among tax payers, the public relations wing of the State G.S.T. Department will be strengthened. The services of the officers belonging to the Information and Public Relation department will be utilized through deputation arrangement.

Value Added Tax

  • A comprehensive amnesty scheme was implemented last year for VAT arrears will continue in the new financial year also.
  • If the arrears under this scheme are paid in lump sum, 40% reduction in tax will be allowed. For those who opt to pay in instalments, the reduction will be 30%. Options shall be filed before 31st August 2021. All other conditions of the present amnesty scheme will continue.

Kerala General Sales Tax Act

  • The amnesty scheme announced in the last year’s budget for the Kerala General Sales Tax Arrears for the period 2005-06 to 2017-18 will continue this year also.

Attached is the relevant extract of the budget speech for your reference.

Full budget speech can be accessed from http://www.finance.kerala.gov.in/bdgtDcs.jsp

Trust the update is useful.

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