Curb tax benefit on inter-state purchases, increase borrowing limit beyond 3%: Kerala's wish list to Centre ahead of Union Budget
KOCHI: Kerala's wish list to the Centre ahead of the Union Budget includes an amendment to the Central Sales Tax Act to restrict industries from purchasing petroleum products at 2% from other states. This is causing a huge revenue loss to the state as the tax on petroleum products is the major revenue source for the government after the GST implementation, according to the state.
The benefit to make the inter-state purchase of goods at concessional rate on the strength of Form-C should not be allowed for the manufacture of GST goods, goods used in telecommunications network, mining or for the generation or distribution of electricity, said the state's note to the Centre as part of pre-budget consultations.
The tax benefit on inter-state purchase of non-GST goods should be allowed only to the resellers of the said goods and to the manufacturers of only three petroleum products -- petrol, high-speed diesel and aviation turbine fuel, the note said.
The state has repeated its long-pending demand to increase the additional borrowing limit beyond 3% in the next fiscal. The additional limits sanctioned for the state for ways and means and overdraft in the wake of the pandemic are due to end by this financial year end. This should not be stopped at once but in phases. The state wants the release of Rs 600-crore performance grant from the 14th Finance Commission Award for local self-government institutions.
Kerala also called for a review of the present cess revenue sharing. Since cesses are outside the divisive pool, states are getting only 32% of the Centre's resources as against the promised 42%. The terms of the subordinate debt window and fund of fund schemes under the Aatma Nirbhar Bharat Package be liberalised to help the coir and cashew industries with NPA status. Kerala has also urged the Centre to increase its share in the social security pensions. The state has asked the Centre to raise its share from the Rs 300-Rs 500 range to at least Rs 1,000. Special packages for the tourism sector and loss-making metro services and a price support scheme for commercial crops are other recommendations.