Centre hopes to collect nearly Rs 3.02 lakh cr from cesses, surcharges in FY19

The government is likely to garner nearly Rs 3.02 lakh crore in cesses and surcharges in FY19, translating to an 8.5-percent jump over estimated FY18 collection of Rs 2.78 lakh crore, reported Business Standard.

It is a staggering sum in light of the fact that the amount equals the Centre’s entire capital expenditure for FY19 pegged at Rs 3 trillion.

Cesses are taxes imposed by the central government for a specific purpose. The fund, which is collected and added to the Consolidated Fund of India (CFI), is used by the Centre for specified purposes. It is not shared with the states.

Until last year, before GST was implemented, India had 20 different cesses including for Swachh Bharat, Krishi Kalyan, Clean energy, Education and so on. Each of this was levied for funding a particular purpose.

The budgeted target for FY18 was Rs 2.95 lakh crore but revised estimates pegged it at Rs 2.78 lakh crore. The shortfall of Rs 170 billion is due to abolition or withdrawal of some cesses and surcharges levied over indirect taxes which are now subsumed in GST.

As per the Budget document, the Centre collected Rs 41 billion and Rs 27 billion via the Swachh Bharat cess and the Krishi Kalyan cess, respectively, in FY18. This is lower than the budgeted collection of Rs 133 billion and Rs 88 billion, respectively. The low collection was due to a shift to GST in July.

The cess and surcharge collection works out to around Rs 3.02 lakh crore for FY19. This is after adjusting for GST compensation cess of Rs 613 billion in FY18 and Rs 900 billion in FY19 to be paid to states to make up for their losses on account of a shift to GST.

In the recent Union Budget 2018, FM Jaitley announced an increase in the education cess on personal income tax and corporation tax to 4 percent, among other taxes.

As per the estimates, the Centre hopes to collect up to Rs 494 billion in FY19, up from Rs 260 billion the previous year, from the education cess on direct taxes alone. From surcharges on direct taxes, it hopes to collect Rs 1 trillion in FY19, up from Rs 647 billion the previous year, while from the social welfare surcharge on customs, the Centre has pegged collections at Rs 80 billion in FY19.

The collection from cess has jumped nearly 40 percent in the past one year. In the past three years, revenues collected from these cesses and surcharges have tripled.moneycontrol