Amnesty schemes, arrear waivers and vehicle tax revisions in Revised Kerala Budget
Chief Minister V.D. Satheesan has announced a clutch of amnesty and arrear waivers in addition to vehicle tax revisions, presenting the 2026-27 Revised Budget in
Chief Minister V.D. Satheesan has announced a clutch of amnesty and arrear waivers in addition to vehicle tax revisions, presenting the 2026-27 Revised Budget in the State Assembly on Friday (June 19). The Budget has also sought to bring clarity to the sales tax structure applicable to low-strength alcohol. The tax rate has been fixed at 120% for low alcoholic beverages with alcohol strength ranging from 0.5% v/v (alcohol by volume) to 10% v/v, and 175% for products with alcohol strength above 10% v/v and up to 20% v/v. Under amendments to the Foreign Liquor Rules, alcoholic products with alcohol strength ranging from 0.5% v/v to 20% v/v – excluding beer and wine – were classified as ‘low alcoholic beverages.’ The road tax on electric vehicles (EV) priced up to ₹10 lakh stands slashed from 5% to 3%.
The road tax on EVs costing between ₹15 lakh and ₹20 lakh has been reduced from 8% to 5%. On the other hand, the road tax on EVs priced above ₹40 lakh has been increased from 10% to 15%. Road tax for other price categories remains unchanged. The quarterly taxes on all India tourist permit (AITP) buses have been reduced to encourage more all-India tourist permit buses to register in Kerala. The quarterly tax rate of ₹2,000 per seat has been slashed to ₹900 while the per-sleeper rate stands slashed from ₹3,000 to ₹ 1,500. In the case of trailer vehicles, the tax slabs have been unified and revised to attract more vehicle registrations in Kerala. The additional tax slab imposed on trailer vehicles weighing more than 20 tonnes has been removed.
The rate has been reduced to the rate applicable to vehicles weighing more than 15 tonne (₹2250 plus ₹130 per excess 250 kg). Under the Flood Cess Arrears Settlement Scheme, 2026, taxpayers will get an opportunity to settle arrears on the 1% flood cess levied on Goods and Services Tax (GST) applicable on Business-to-Customer (B2C) supplies. The cess was introduced to mobilise additional resources required by the State in the wake of natural disasters. Although the levy period had ended, “substantial arrears” have accumulated, according to Mr. Satheesan. Under the Small Arrear Waiver Scheme, 2026, arrears under various tax laws that existed before the introduction of GST will be waived. In respect of assessment orders up to 2017-18 under the pre-GST laws such as the Kerala Surcharge on Taxes Act, the Kerala General Sales Tax Act, the Kerala Tax on Luxuries Act, the Kerala Agricultural Income Tax Act, the Kerala Value Added Tax Act, and the Central Sales Tax, Act, all arrears involving tax amounts above ₹50,000 but not exceeding ₹2 lakh will be fully waived, along with the interest and penalty.
The BriefWire