Cess on fuel, liquor is for the larger good, says Balagopal

Aim of the cess is to create a seed fund for aiding government’s social security commitments. One-time tax on new vehicles increased, while one-time tax on electric cabs reduced to 5%

February 03, 2023 06:11 pm | Updated 07:15 pm IST - THIRUVANANTHAPURAM

The social security cess on fuel and liquor, designed to rake in ₹1,150 crore as additional revenue, is aimed at creating a seed fund for aiding the government’s social security commitments, Finance Minister K.N. Balagopal said after presenting the State Budget on Friday.

The cess will be collected at the rate of ₹2 a litre on petrol and diesel, raking in an additional ₹750 crore as revenue. The liquor cess is ₹20 on every bottle of Indian-made foreign liquor (IMFL) costing ₹500-₹999 and ₹40 per bottle costing above ₹1,000. The government expects an additional revenue of ₹400 crore from this.

Mr. Balagopal said the cesses, while making fuel and liquor costlier, should be treated as intended for the ‘‘larger good.’‘ Approximately 57 lakh persons benefit under the present policy of social security pension of the government. The financial commitment to meet this expenditure has now touched ₹11,000 crore.

Cars, motorcycles

The hike in the one-time tax on newly purchased motor cars and private service vehicles for personal use is expected to bring in an additional revenue of ₹340 crore. The hikes are as follows: a 1% hike for vehicles with purchase values up to ₹5 lakh and above ₹15 lakh. For vehicles with purchase value above ₹5 lakh and up to ₹15 lakh, the hike is 2%.

Eyeing an additional income of ₹92 crore, the one-time tax on newly purchased motorcycles costing up to ₹2 lakh has been enhanced by 2%.

The one-time cess levied on all newly registered motor vehicles has been doubled to generate an additional revenue of ₹7 crore. Meanwhile, the one-time tax levied at the rate of 6% to 20% on electric motor cabs and electric tourist motor cabs has been slashed to 5%, bringing it on a par with the tax on electric private vehicles.

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