Kerala Budget 2025: 50% Surge in Land Tax to bring ₹100 Crore to Govt. Coffers

The Kerala State Budget 2025-26 was presented by Finance Minister K.N. Balagopal in the State Legislative Assembly today. One of the most controversial changes came in the form of a 50% hike in land tax, which is expected to usher in ₹100 Crore to the State Government’s Revenue.

Among a series of key changes, the Finance Minister attributed the increased land tax rates to the rising value of land and its potential for generating income. Minister Balagopal stated that the increased rates of land have a direct nexus with the overall development seen across the State, and thus the base tax rates of all existing slabs are to be increased by 50%.

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Under the revised structure, landowners in panchayat areas will now pay ₹7.5 per Are per annum for up to 8.1 Ares, while those with land above this limit will pay ₹12 per Are per annum. In municipal council areas, the tax has been raised to ₹15 per Are per annum for up to 2.43 Ares and ₹22.5 per Are per annum for land above this extent. Similarly, in municipal corporation areas, the tax will increase to ₹30 per Are per annum for up to 1.62 Ares, while landowners with larger holdings will now pay ₹45 per Are per annum.

One of the primary points of contention raised by the Minister was that the Center has, in increasing prejudice, reduced central tax devolution and discontinued GST compensation, prompting the State to explore newer avenues to improve its financial position.

Between 2021-22 and 2024-25, Kerala’s State Own Tax Revenue ( SOTR ) grew by 15.8%, while total revenue, including tax and non-tax collections, increased by 17.4%. The government aims to raise Kerala’s own tax revenue from ₹47,660 crore in 2020-21 to ₹81,000 crore by the end of 2024-25—an increase of 70% in four years.

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While the CPI(M)-led Kerala Government maintains that the Budget revision aims towards sustaining welfare programs and infrastructure projects, it has drawn immense criticism from the leader of opposition who termed it a ‘farewell budget’.

At the same time, experts argue that the move could put a hiatus to land hoarding, leading to better utilization of land.

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