Kerala’s 2025-26 state budget implemented selective tax increases expected to generate an additional ₹100 crore, emphasizing land revenue and older vehicles to support infrastructure without broad-based levies.
Major Tax Adjustments
Land revenue basic tax rates across all categories were raised by 50%, correcting historically low levels to channel funds into projects like the Kerala Infrastructure Investment Fund Board (KIIFB). Road tax on two-wheelers, three-wheelers, and private cars older than 15 years also increased by 50%, while lifetime tax for private electric cars was introduced on a cost-proportional basis.
Revenue Growth Breakdown
State GST collections are budgeted to rise 12% to ₹37,763 crore, sales tax/VAT by 10% to ₹33,591 crore, and vehicle taxes by 8% to ₹7,397 crore compared to 2024-25 revised estimates. These measures lifted own tax revenue to 6.4% of GSDP, avoiding hikes in excise or stamp duties for wider relief.
