NEW DELHI: Comptroller and Auditor General of India (CAG) on Tuesday tabled a report in Parliament on the union accounts for 2022-23 and 2023-24, in which the auditor has, among other issues, pointed out how cess and surcharge collections have been going up over the years and become a significant part of tax revenues - at Rs 4.7 lakh crore in FY2022-23 and Rs 4.9 lakh crore in 2023-24, they contributed almost 12-14% of the total gross tax collection.
The cess and surcharge collection saw a significant increase of Rs 1.7 lakh crore between 2018-19 and 2022-23. The collection increased massively during Covid years and reached around Rs 5 lakh crore in 2021-22. Surcharge, or tax on tax, alone increased by 207% from Rs 40,800 crore in 2021-22 to Rs 1.25 lakh crore in 2022-23.
However, the auditor has raised concerns over govt not using the excess levy collected from citizens for the intended purposes. "Test check of records revealed aggregate impact of short transfer of Rs 3,69,307 crore, till March 2024, to the designated reserve funds," it said.
Cess is an additional tax levied to raise funds for a specific purpose. These revenue streams are not shared with states, except GST compensation cess.
"Total collection under cess and surcharge during FY2023-24 was Rs 4,88,316 crore. This was 14% of gross tax receipt, a marked reduction from its peak in FY2021-22 when it was 20.23%," CAG said. "We found that in respect of four reserve funds, Centre collected Rs 2.4 lakh crore through cess/levies/deposits from FY2018-19 to FY2022-23, but transferred only Rs 344 crore into the reserve funds. Short transfer has an impact of understating the revenue deficit," CAG observed.
The reserve funds are Oil Industry Development Fund, Investor Education and Protection Fund, Agriculture Infrastructure and Development Fund and Senior Citizen Welfare Fund.
The auditor also pointed out that Public Accounts Committee (PAC) had recommended in its 69th report that cess should have a well-defined purpose with a sunset clause for discontinuation if the objectives have been achieved. The major burden of cess & surcharge collection is on excise (27.38% of collection), Customs (8.35%), GST (26%), Income Tax (17.6%) & Corporation Tax (17.9%). GST compensation cess is expected to be phased off by 2026.
The cess and surcharge collection saw a significant increase of Rs 1.7 lakh crore between 2018-19 and 2022-23. The collection increased massively during Covid years and reached around Rs 5 lakh crore in 2021-22. Surcharge, or tax on tax, alone increased by 207% from Rs 40,800 crore in 2021-22 to Rs 1.25 lakh crore in 2022-23.
However, the auditor has raised concerns over govt not using the excess levy collected from citizens for the intended purposes. "Test check of records revealed aggregate impact of short transfer of Rs 3,69,307 crore, till March 2024, to the designated reserve funds," it said.
Cess is an additional tax levied to raise funds for a specific purpose. These revenue streams are not shared with states, except GST compensation cess.
"Total collection under cess and surcharge during FY2023-24 was Rs 4,88,316 crore. This was 14% of gross tax receipt, a marked reduction from its peak in FY2021-22 when it was 20.23%," CAG said. "We found that in respect of four reserve funds, Centre collected Rs 2.4 lakh crore through cess/levies/deposits from FY2018-19 to FY2022-23, but transferred only Rs 344 crore into the reserve funds. Short transfer has an impact of understating the revenue deficit," CAG observed.
The reserve funds are Oil Industry Development Fund, Investor Education and Protection Fund, Agriculture Infrastructure and Development Fund and Senior Citizen Welfare Fund.
The auditor also pointed out that Public Accounts Committee (PAC) had recommended in its 69th report that cess should have a well-defined purpose with a sunset clause for discontinuation if the objectives have been achieved. The major burden of cess & surcharge collection is on excise (27.38% of collection), Customs (8.35%), GST (26%), Income Tax (17.6%) & Corporation Tax (17.9%). GST compensation cess is expected to be phased off by 2026.
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