The Finance Bill passed in the Kerala Assembly amid a boycott by the opposition

The Kerala Finance Bill (No. 3), which includes a reduced sales tax on soft drinks in addition to tax revisions and amnesties, was passed in the Kerala assembly on Wednesday – the last day of the budget session – amid a boycott by the opposition Left Democratic Front (LDF).

The draft law says that the tax revision on low-alcohol drinks will come into effect only after the government announces it in the official gazette. As announced in the Revised Budget 2026-027, the rates for low-alcohol beverages have been revised to 120% and 175% for beverages with an alcohol content ranging from 0.5% vol (v/v) to 10% v/v for beverages with an alcohol content above 10% v/v to 20%.

The LDF had raised objections to the proposal on the grounds that the United Democratic Front (UDF) government had approved it without referring it to the substantive committee of the House. Announcing the boycott, Leader of the Opposition Pinarayi Vijayan claimed that the tax cuts were designed to allow liquor companies to flood Kerala with their products. The UDF government had reduced the tax by more than 130% and the LDF did not agree to it, Mr. Vijayan said.

The chief minister dismissed the opposition’s allegations, saying that all procedures were followed while introducing the bill. The revised tax on soft drinks was announced in the revised budget tabled on 19 June. The Finance Bill was introduced in the Assembly based on a decision taken at the Assembly’s Business Advisory Committee meeting on June 24. The previous LDF government had also approved its financial proposal in the assembly in February this year without referring it to the substantive committee, Mr. Satheesan said.

The Finance Bill also included the following tax revisions, Small Arrears Relief Scheme, 2026 and Flood Arrears Settlement Scheme, 2026. Road tax on electric vehicles (EVs) priced up to ₹10,000 is reduced from 5% to 3%. Road tax on electric cars in the price bracket of ₹ 15 to ₹ 20 lakh has been reduced from 8% to 5%. On the other hand, the road tax on electric cars priced above ₹40,000 is increased from 10% to 15%. Road tax for other price categories remains unchanged.

Quarterly taxes on All India Tourist Permit (AITP) buses have been reduced to register more buses with tourist permits from all over India in Kerala. The quarterly tax rate of ₹2,000 per seat has been reduced to ₹900, while the bed rate is reduced from ₹3,000 to ₹1,500. In the case of trailers, the tax tables have been unified and revised. The additional tax rate imposed on trailers weighing more than 20 tonnes has been removed.

Under the 2026 flood arrears settlement scheme, taxpayers can settle arrears on the 1% flood tax imposed on Goods and Services Tax (GST) applicable to business-to-business (B2C) supplies. The rebate was introduced to raise funds to deal with natural disasters. Although the levy period has ended, arrears have accumulated.

Under the small arrears waiver scheme, arrears under various tax laws that existed before the introduction of GST will be waived off. In respect of assessment orders till 2017-18 under the pre-GST package of laws, all arrears involving tax amounts above ₹50,000 but not exceeding ₹2,000 will be fully waived, along with interest and penalty. This benefit will only apply to tax arrears related to assessments issued by March 31, 2027.

Published – 01 Jul 2026 20:14 IST