The increasing trend of Cesses is making a deep hole into your pockets without you taking a notice of it. In fact, Cesses have become a silent tactic to upsurge taxes. Significantly, in the past decade, the collection through Cesses has augmented much faster than conventional tax revenues. And from almost a tiny in 2000-01, Cesses now accounts for almost 15 percent of total tax collections, direct and indirect.
If we see the data year wise, while revenue from Cess in 2009-10 accounted for Rs 57843 crores, in 2012-13, it reached to Rs 85328 crore and Rs 193893 in 2016-17. The development saw almost 33 times increase in 7 years, as per a report in TOI. Incidentally, in the same period, the total tax revenue raised 2.6 times.
It has become compelling with nearly 20 cesses and surcharges. Cesses such as education and Krishi Kalyan are like super tax and we pay them with every other tax.
Notably, cesses and surcharges that fetch more than Rs 1000 thousand crore include cesses on petrol, diesel and crude (Rs 107303 crore), Education cess (Rs 30274 crore), clean environment cess (Rs 26148 crore), Swacch Bharat cess (Rs 10000 crore), surcharges on income tax (Rs 7650 crore), Krishi Kalyan cess (Rs 5000 crore), infrastructure cess (Rs 3000 crore), and surcharge on Paan masala and tobacco (Rs 1190 crore).
Incidentally, this revenue from cess is not shared with the states. Unlike tax revenue, collection from cess and surcharges do not go into the divisible pool shared with states. Consequently, Cess as a Center’s tax revenue has increased in recent years.
While cess as Centre’s net tax revenue accounted for 12.70% in 2009-10, it brought 11.8% revenue in 2011-12, 11.2% in 2013-14 and 18.4% in 2015-16.
The government justifies announcing new cess claiming that the states’ share in taxes increased abruptly after 2015-16 with execution of the 14th finance commission report that affected Centre’s revenue.
But the question that surface here is, will roll out of GST lead to end of cesses? Yes, all the present Cesses will be incorporated in GST. However, a new limited period cess will be levied to recompense states whose tax revenue may go down owing to GST.
