With Budget 2021 round the corner, there are discussions on what the FM has in store for the Taxpayers & one of the talks doing rounds is a COVID-19 Cess.
So let’s have a brief overview of what and how exactly this concept of Cess works –
📍 Article 270 of the Constitution of India grants the power to the Union to raise revenue by levying cess.
📍 The Government can collect tax in the name of cess for Generating revenue but it shall be earmarked for specific purpose only.
📍 Also an important point to be noted is that Central cess collections aren’t shared with states under revenue devolution.
📍 In Budget 2015, Swachh Bharat Cess (SBC) was announced, while in the next year we came across Krishi Kalyan Cess (KKC) in Budget 2016. Such and many other cess were introduced as and when required in earlier years. These were later abolished once the purpose was served.
📍 The only active cess at present is a 4% Health and Education Cess. This is charged on the Tax amount as computed based on rates in force.
📍 The Centre is likely to bear the cost of COVID-19 vaccination programme which commenced yesterday. The levy of COVID 19 cess will help Government in faster & earmarked generation of funds for this cause.
Let’s see what happens on the 1st of February, 2021 once the Budget 2021 is on table!