Kerala sees 35% surge in commercial tax collection

Kerala has achieved 35 per cent growth in commercial tax collection during 2006-07, a record in the history of tax collection in the state.

According to Thomas Isaac, the state's minister for finance, the total collection of value-added tax (VAT) had increased to Rs 4,500 crore in 2006-07 from Rs 2,950 crore in the previous fiscal. Isaac said Kerala's achievement was tremendous because the national average growth was 30 per cent last fiscal.

The government has targeted an average growth rate of 25 per cent in tax collection for the next five financial years so that the fiscal management of the state would in the right direction. Isaac said his ministry aimed at cleaning up the deficits in the state's budget and by 2010, the revenue deficit would be zero per cent.

In the current year, the finance ministry has targeted a tax collection of Rs 6,100 crore through improving the efficiency of the commercial tax department and computerising offices. The minister said in the next three months, all the offices of the tax department, including check posts, would be fully computerised. The department will be online within the next six months.

Spot inspections and raids of commercial establishments will be minimised as the computerised system will enable the officials to verify the collection online by using tax index numbers. The government has also given strict instruction to those who pay a tax of Rs 25 lakh and above to file e-returns.

Isaac said the government had no plans to reduce the 4 per cent tax for gold although there is strong pressure from gold merchants to reduce this to 1 per cent.

The department will ensure the payment of taxes in the gold business by adopting spot inspection since many jewellers are still reluctant to adopt the compounding facility. Tax collection from gold has increased to Rs 100 crore in 2006-07 from Rs 21 crore in the previous year.

The minister also said the tax on copra and copra cake would not be reduced to zero per cent unless neighbouring states reduced it. "We do not want unnecessary competition with neighbouring states on the tax front in order to enhance our business. This will be against the principle of equality in tax rates among various states," he said.

The collection of excise duty is around Rs 2,000 crore and the revenue from stamp duty in 2006-07 is more than Rs 2,000 crore. Isaac anticipated a sharp increase in the collection of stamp duty because land value is soaring throughout the state.