Non-utilisation of Cesses & Levies

Non-utilisation of Cesses & Levies

Part of: GS Prelims and GS-III – Taxes

In news

• Recently, the Comptroller and Auditor General of India (CAG) told Parliament that the Centre has only transferred 60% of the proceeds from cess/levies in Fiscal Year 2018-19 to the relevant Reserve Funds and retained the balance in the Consolidated Fund of India (CFI).

Do you know?

• Cesses and levies collected are required to be first transferred to designated Reserve Funds and utilised for the specific purposes intended by Parliament.
• Funds collected through Central taxes along with cesses and other levies go to the CFI.
  Taxes and surcharges in CFI are parked in a divisible pool and 42% of the total is given to States as devolution.

Important value additions

Consolidated Fund of India

• It was constituted under Article 266 (1) of the Constitution of India.

• Composition:

• All revenues received by the Centre by way of taxes (Income Tax, Central Excise, Customs and other receipts) and all non-tax revenues.
• All loans raised by the Centre by issue of Public notifications, treasury bills (internal debt) and from foreign governments and international institutions (external debt).
• All government expenditures are incurred from this fund except exceptional items which are met from the Contingency Fund or the Public Account.
• No amount can be withdrawn from the Fund without authorization from the Parliament.
• The CAG audits the fund and reports to the relevant legislatures on the management.

Cess

• Cess is a form of tax levied over and above the base tax liability of a taxpayer.

Surcharge

• A surcharge is an extra fee, charge, or tax that is added on to the cost of a good or service, beyond the initially quoted price.