CESS

Current Context : The Comptroller and Auditor General (CAG) has reported that as of 2023-24, the Central Government has failed to transfer ₹3.69 lakh crore worth of cess collections to their designated funds.

ABOUT CESS

• Definition: A cess is a tax on tax levied for a specific purpose until the required funds are collected. Examples: Swachh Bharat Cess for cleanliness drives
• Key Features:
  • Paid by the public, added to their basic tax liability
  • Imposed over and above existing taxes
• Difference from Regular Taxes:
  • Collection & Use:
    • Taxes like income tax → kept in Consolidated Fund of India (CFI) and used for any purpose
    • Cess → first credited to CFI, but used only for the specified purpose after parliamentary approval
  • Revenue Sharing:
    • Taxes must be shared with states
    • Cess proceeds may or may not be shared with states