CESS is a type of tax charged over the basic tax liability for specific reasons. When the government of India (state and central government) raises funds additionally for reasons like additional education facility for primary or secondary education, additional medical facility, or disaster management funds, CESS is imposed by the government as a percentage of tax payer’s basic tax liability. CESS is imposed only if there is any additional need for funds to meet a particular type of expense for the welfare of the people of India and which is also discontinued once the goal is achieved.
What is the difference between Regular Tax and CESS?
Regular Taxes like Income Tax, Goods and Service Tax, Excise Duty, etc are collected by the government and deposited into CFI (Consolidated Fund of India). This regular tax can be utilized by the government for any undefined purpose for the nation and collecting tax is a regular process whereas CESS once collected gets credited to CFI initially but at the end, it is used for the purpose for which it was collected.
Common types of CESS in India
- Education Cess
- Health and Education Cess
- Swachh Bharat Cess
- Krishi Kalyan Cess
- Infrastructure Cess