CESS

Cess is an additional tax charged on top of a taxpayer’s basic tax liability, levied for a specific purpose. When the government, whether state or central, needs extra funds for something like primary or secondary education, medical facilities, or disaster relief, it imposes a cess as a percentage of the basic tax owed. The key thing is that it’s only charged when there’s a genuine, defined need, and it’s supposed to be withdrawn once that need has been met.

Regular tax vs. cess: what’s the difference?

Regular taxes, income tax, GST, excise duty, and so on, go into the Consolidated Fund of India and can be used by the government for more or less any national purpose. They’re also collected continuously, year after year. Cess works differently: it also lands in the CFI initially, but ultimately it’s earmarked for whatever specific purpose it was collected for, not general spending.

Common types of cess in India:

• Education Cess
• Health and Education Cess
• Swachh Bharat Cess
• Krishi Kalyan Cess
• Infrastructure Cess