What is Cess ?

 Cess is a tax mistaken from the word assess, that means to evaluate or estimate.

• Cess is an additional tax, that is levied over the existing tax.
• It is levied above the base tax liability of a taxpayer.
• It is levied to fulfill specific purposes and, is dicontinued when the purpose is fulfilled, e.g. government levies education cess in order to generate additional revenue for funding primary, secondary and higher education.
• It is levied on both direct and indirect taxes.

Difference between Cess and Tax

• It is charged over and above existing tax.
• All tax goes to Consolidated Fund of India (CFI), Cess may initially go to the CFI, but has to be used for the purpose it was collected.
• Procedure for introducing Cess is comparatively simple than those provisions done for introducing taxes, which usually means a change in law.
• Cess is also easier to modify and abolish.

Types of Cess in India

• Education Cess: Education Cess was introduced to finance and provide standard quality education to poor people.
• Health and Education Cess: Proposed in budget 2018 by Finance Minister Arun Jaitley to meet the education and health needs of the rural and Below Poverty Line(BPL) families.
• Swachh Bharat Cess: Introduced in 2015, a 0.5% Swachh Bharat Cess was imposed to fund national campaign for clearing the roads, streets and the infrastructure of India.
• Krishi Kalyan Cess: This cess was aimed at developing the agricultural economy, and was collected at the rate of 0.5%.
• Infrastructure cess: Announced in Union Budget 2016, this Cess was charged on the production of vehicles.

Here are some good books on Finance and GST