Lok Sabha Question No. 62 (UNSTARRED), answered on 2019-11-18
Subject: Levy of Cess
Ministry: FINANCE
Asked by: Kirit Premjibhai Solanki

GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 62

TO BE ANSWERED ON MONDAY, NOVEMBER 18, 2019 KARTIKA 27, 1941 (SAKA)

## LEVY OF CESS

62. DR. (PROF.) KIRIT PREMJIBHAI SOLANKI:

Will the Minister of FINANCE be pleased to state

- (a) the details of all cesses levied by the Central Government along with the reasons for levy of these cesses;
- (b)  the  amount  of  taxes  collected  in  each  of  these  cesses  and  the  manner  in  which  they have been utilized; and
- (c)  whether the funds collected by levying cess remain underutilized and if so, the details thereof?

## ANSWER MINSTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

- (a) to (c ): Direct Tax

Vide the Finance Act, 2018, for FY 2018-19, Education Cess on income-tax, Secondary and  Higher  Education  Cess  on  income-tax,  Krishi  Kalyan  Cess  and  Pradhanmantri  Garib Kalyan  Cess  were  discontinued.  However,  a  new  cess,  by  the  name  of  'Health  and Education Cess' was introduced and is currently levied at the rate of 4% on the amount of income tax so computed inclusive of surcharge, wherever applicable, in all cases. The cess was levied  in  order  to  fund  various  schemes  to  take  care  of  the  needs  of  education  and health of BPL and rural families. The Actual collection for 2017-18 is as follows:-

| Cess                            |   Year 2017-18 (Rs. in crores) |
|---------------------------------|--------------------------------|
| Primary Education Cess          |                       18783.2  |
| Secondary Education Cess        |                        9390.92 |
| Pradhanmantri Garib Kalyan Cess |                           2.25 |
| Krishi Kalyan Cess              |                        1454.15 |

## Indirect Tax

On  account of GST roll out with effect from 1 st July,  2017 most of the cesses levied under Customs, Central Excise and Service tax have been abolished w.e.f 1 st July,  2017. However, to finance development of oil industry and infrastructure projects, cess on Crude Petroleum Oil and Road & Infrastructure Cess respectively were levied.

Further as per provisions in Section 7 of the GST (Compensation to States) Act, 2017 loss of revenue to the States shall be calculated and compensation for loss of revenue to the State shall be provisionally calculated and released at the end of every two months' period and shall be finally calculated for every financial year after receipt of final revenue figures as audited by the Comptroller and Auditor General of India.

For providing such compensation to the States, compensation cess is being levied on certain luxury and demerit goods as per provisions in Section 8 of the GST (Compensation to  States)  Act,  2017,  and  compensation  cess  is  being  credited  into  a  non-lapsable  Fund know  as  Goods  and  Services  Tax  Compensation  Fund  which  forms  part  of  the  public account of India. Consequent upon implementation of GST in the Country, the compensation Cess  collected w.e.f July, 2017 is being specifically utilized for  payment  of  GST Compensation to States for transition period of 5 years w.e.f. 1 st July, 2017 30 th June, 2022 as per GST (Compensation to States) Act, 2017.

The Actual collection for 2017-18 in respect of these Cesses is per following details:-

| Cess                                                             | Year 2017-18 (Rs. in crores)   |
|------------------------------------------------------------------|--------------------------------|
| Cess on Crude Petroleum Oil (OID cess under Central Excise)      | 13,579.21                      |
| Road & Infrastructure Cess (additional duty of Excise on MS/HSD) | 83,123.19                      |
| GST Compensation Cess                                            | 62,611.59                      |

The difference in cess collection and its utilization is underutilized.  In this regard the statement showing collection and utilization of various Cesses for the period of 2012-13 to 2017-18 is as per Annexure .

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