WHAT IS CESS?

Cess is a form of tax charged and levied. Over and above the base tax liability of a taxpayer. A cess is imposed additionally when the state or the central government looks to raise funds for special purposes. For the development or welfare of a particular service or sector. Cess is expected to be levied till the government gets enough money for that purpose. For example, the government levies cess on education to generate additional revenue for funding primary, secondary, and higher education. Cess is not a permanent source of revenue for the government. And it is discontinued when the purpose levying is fulfilled.

Cess can be levied on both direct and indirect taxes. The government can impose cess for the purposes such as generating funds for cleaning rivers, disaster relief, education, etc.

Cess is different from all taxes such as GST, income tax, and excise duty, etc. Like all other taxes goes to the Consolidated Fund of India (CFI). Cess may initially go to the CFI but must be used for the purpose for which it has to be collected. If cess collected in a particular year goes unspent. It cannot be allocated for other purposes. The amount gets carried out for the next year and only be used for the cause it was meant for. Unlike some other taxes, the central government does not need to share cess with the state government either in parts or in full. Cess is easy to modify and abolish.

DIFFERENCE BETWEEN CESS AND TAX

TYPES OF CESS

1. EDUCATION CESS – It was designed to finance and provide standard quality education to poor people.
2. HEALTH AND EDUCATION CESS - Proposed in Budget by the finance minister to meet the education and health needs of rural and below poverty line (BPL) families.
3. SWACHH BHARAT CESS – Introduced in 2015, it was imposed to fund all national campaigns for clearing infrastructure, streets, rivers, roads, etc.
4. INFRASTRUCTURE CESS – Introduced in the union budget 2016, the cess was charged on the production of vehicles.

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