AFTER EDUCATION CESS, NEW CESS ON THE OFFING

[Dr. Sanjiv Agarwal]

It seems that our Government has learnt how to raise cesses without major opposition from the citizens. While surcharges have been common, cesses by one name or the other and are being collected, thus taking people for granted. Road cess, petrol cess, education cess (both primary and secondary & higher education) and now a cess called Swachh Bharat Cess.

It is known to all that thousands of crores of rupees were raised through education cess and secondary & higher education cess (over ₹ 25,000 crore) by the Union Government over the years. Where and how this cess has been applied or spent is not transparent or known to public at large. Therefore, the need of the cess, its utilization and accountability of tax collectors. All should be in public domain and subject to public scrutiny. Taxes and special purpose cesses, per se, are not bad or ought to be always criticized but the contributors have a right to know where their hard earned money has found way to. It must be used for the desired purpose in quantum as well as quality and must be reflected in the deeds as well as Government documents. Much needs to be done by the Government on this court so far as education cesses are concerned. If Government does this successfully, people will willingly and happily contribute to the SBC too.

Education cess @ 2 percent on Service Tax was levied w.e.f. 10.09.2004 and secondary & higher education cess @ 1 percent on Service Tax was levied w.e.f. 11.05.2007. Since 11.05.2007 till 30.06.2015 a total of 3 percent on account of both education cesses was being levied.

If one takes into consideration the total Service Tax collection since 10.09.2004 which is ₹ 9,14,895/- crore, it can be said that the Central Government collected a huge sum of ₹ 26,769/- crore on account of both education cesses. This amount of cess is not an a small amount to be left unnoticed.

The developments in the Central Government suggest that yet another cess is brewing up for levy in the ensuring Budget. After Swachh Bharat Cess (SBC), it is learnt that Ministry of Skill Development and Entrepreneurship (MSDE) has forwarded a proposal for 2 percent cess on tax payers to fund the country's skill development effort. Such cess would be meant for raising funds for skill development programme of Central Government. It may be noted that the present Government launched a programme to promote entrepreneurship and equip 500 million Indians with skills by 2022 to enable them to find jobs / employment.

While it is not known whether it will be a cess (infact an additional tax) levied on direct taxes or indirect taxes, it is also to be seen that such cess is levied on the existing tax or on the gross value or income (as in case of Swachh Bharat Cess).

The politics and economics of cesses is not new to India. Various Governments have been levying cesses and additional taxes on the citizens by way of various names of surtax, surcharge or cesses. Coal cess, oil cess, road cess, R & D cess, education cess, water cess, textile cess, swachh bharat cess, are just a few names to recall. While the revenue from a cess is used to fund a particular project, programme or mission, proceeds from surcharges flow into consolidated fund of India for use as per budget allocation. About 17 percent of the current central taxes come via different cesses which is not a desirable practice. Infact there should be a comprehensive budget exercise wherein all tax revenue sources should be planned and expenditure budget / plan allocated. Once you have a reasonable taxation structure, there should not be any need for cesses. Levy of cesses should be resorted to in rarest of rare cases and as an exception, rather than becoming a general practice.

What is required is that we as citizens by this country should prevail over the Government to desist from such practices and insist not to take people of this country for granted. There has to be accountability fixed for the utilization of amount collected as revenue and more so, utilization for the righteous purposes for the development of nation and welfare of all citizens. It is also a fact that one section of the citizens go on contributing to the welfare of other section of the citizens and these taxes are not reflected in the growth of the country. All these cesses are the examples of contributions made and any benefit derived there from by the contributors.