Kerala Chief Minister V D Satheesan announced a comprehensive revised state Budget for 2026-27, projecting revenue receipts of ₹1,69,646.37 crore against revenue expenditure of ₹2,05,001.67 crore, resulting in a revenue deficit of ₹35,355.30 crore. According to reports from Business Standard, the Budget estimates capital expenditure at ₹19,651.41 crore and public debt at ₹52,364.13 crore, with an overall deficit of ₹41.23 crore. The government has announced additional expenditure of ₹1,080.95 crore, taking the cumulative deficit at the end of the year to ₹1,504.63 crore. As per The Times of India, this revised budget serves as a roadmap for welfare schemes to be implemented over the next five years, with the UDF government committed to creating a New Era Keralam through reforms in health, education, employment generation, and modern infrastructure development.
The Budget allocated ₹400 crore for Mission Samudra, focusing on coastal development to enhance trade through major ports, with Vizhinjam port being inter-connected to establish Kerala as a port city. According to The Times of India, ₹100 crore has been earmarked for a Rare Earth and Critical Minerals corridor in southern Kerala, while ₹200 crore will set up Kerala as a major aviation and logistics hub. The government announced ₹100 crore to help grow MSMEs in the state and ₹100 crore to set up a film city in Kochi named after JC Daniel. Additionally, ₹50 crore will establish a Wayanad Tribal University and Indigenous Knowledge zone, and ₹50 crore will fund an international standard football stadium in Malabar. As per The Times of India, these initiatives reflect the government's commitment to attracting large-scale investments through modern and innovative approaches, generating resources for the exchequer and ensuring equitable wealth distribution.
The Budget introduced several significant tax relief measures to ease the burden on taxpayers and businesses. As reported by Business Standard, the Flood Cess Arrears Settlement Scheme 2026 was announced for outstanding dues from the 1% Flood Cess levied on GST for B2C supplies between August 1, 2019 and July 31, 2021. Under this scheme, taxpayers paying the entire outstanding principal amount will receive complete waiver of interest and penalty, with the last settlement date set for March 31, 2027. Additionally, the Small Arrear Waiver Scheme 2026 was unveiled for pending dues under pre-GST tax laws, providing full waiver of arrears involving tax amounts between ₹50,000 and ₹2 lakh for assessment orders up to 2017-18 financial year.
The Budget introduced fresh sales tax rates for low-strength alcoholic beverages under the Kerala General Sales Tax Act. According to Business Standard, products with 0.5% to 10% alcohol by volume will attract 120% sales tax, while those with more than 10% and up to 20% alcohol by volume will be taxed at 175%. In the motor vehicle sector, the government reduced quarterly tax on All India Tourist Permit (AITP) buses significantly, with rates per seat cut from ₹2,000 to ₹900 and rates per sleeper reduced from ₹3,000 to ₹1,500. For electric vehicles, road tax on vehicles priced up to ₹10 lakh will attract 3% tax instead of 5%, while those costing between ₹15 lakh and ₹20 lakh will see rates reduced from 8% to 5%.
Chief Minister Satheesan highlighted the government's commitment to addressing social challenges while building a New Era Keralam. As reported by The Times of India, despite severe financial constraints, the government has already implemented key promises under the six Indira Guarantees, including free travel for women in KSRTC buses and the creation of a separate department for senior citizens. The government has increased honorariums for ASHA workers, anganwadi workers, helpers and teachers, while emphasizing the need to create a silver economy by making the best use of senior citizens' capabilities. The Budget also announced a One-Time Settlement Scheme to dispose of 1,46,355 undervaluation cases involving around ₹703 crore in deficit stamp duty dues accumulated between 1986 and 2023. For differently-abled persons, the motor vehicle tax concession was enhanced by increasing the eligible vehicle value limit from ₹7 lakh to ₹15 lakh, while an e-challan Amnesty Scheme allows citizens to settle pending traffic challans by paying 50% of the challan amount.
