The Centre asked all states to dip into the Rs 52,000 crore construction cess fund and directly transfer funds through the direct benefit transfer mechanism to help labourers in the sector.
Cess:
- Cess is a form of tax charged/levied over and above the base tax liability of a taxpayer.
- A cess is usually imposed additionally when the state or the central government looks to raise funds for specific purposes.
- Cess is not a permanent source of revenue for the government, and it is discontinued when the purpose levying it is fulfilled.
- It can be levied on both indirect and direct taxes.
What is the difference between tax and cess?
- Cess is different from taxes such as income tax, GST, and excise duty etc. as it is charged over and above the existing taxes.
- While all taxes go to the Consolidated Fund of India (CFI), cess may initially go to the CFI but has to be used for the purpose for which it was collected.
- If the cess collected in a particular year goes unspent, it cannot be allocated for other purposes.
- The amount gets carried over to the next year and can only be used for the cause it was meant for.
- The central government does not need to share the cess with the state government either partially or in full, unlike some other taxes.
- The procedure for introducing cess is comparatively simpler than getting the provisions done for introducing taxes.
- Cess is also easier to modify and abolish.
Types of cess in India:
- Education Cess
- Health cess
- Krishi Kalyan Cess
- Infrastructure Cess
- Swachh Bharat Cess
- Road cess or fuel cess
Note:
- The BOCW Cess Act, 1996, provides for the levy and collection of cess at 1-2 per cent of the cost of construction.
- The cess has been levied at the rate of 1 per cent of the cost of construction.
- The cess is collected by the State governments and UTs and utilised for the welfare of Building and Other Construction Workers (BOCW) by the respective State Building and Other Construction Workers Welfare Boards.
What is surcharge?
- Surcharge is a charge on any tax, charged on the tax already paid, i.e., surcharge is an additional charge or tax.
- The main surcharges are that on personal income tax (on high income slabs and on super rich) and on corporate income tax.
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