Just as taxpayers have a responsibility to pay taxes, the government ought to ensure that tax proceeds are appropriately utilised. In this light discuss success of various implementation of cess schemes by government in recent years.(250 words)

Mentor’ Comment

  1. Define what is cess.
  2. Name various cess imposed by the government.
  3. discuss their success.
  4. Mention unutilised funds and inefficiency of cess
  5. in conclusion, suggest a way forward for better implementation and monitoring of cess proceeds.


CESS is tax on tax and usually levied for the specific purposes. Once its purpose is solved they are stopped. Unlike the other taxes that have to be shared with other Indian states, the centre keeps the entire amount raised from the Cess. Cess fund is to be kept in the Consolidated Fund of India, before being transferred to the dedicated accounts. Currently there are 6 cess continued to be levied by the centre government namely- Primary Education Cess, Secondary Education Cess, Cess on Crude Petroleum Oil, Road Cess etc.

It is important because-
Governments rely on cesses because they are an easy way to raise tax revenue. Unlike taxes, cesses can be introduced, modified and removed any time without much trouble. As long as the government has a specific reason for imposing a cess, all that it has to do is to put out a notification to this effect. However, even a small modification in a tax rate has to be followed by accompanying amendments in the tax rules and regulations.
According to the latest report released by the CAG; the central government has collected Rs. 2,14,050  through cess in 2017-18. In the financial year 2016-17 the Ministry of Finance said that it collected Rs. 2,35,307 cr. from the cess.

Irregularities in the use of Cess fund are as follows-

As per the rule the cess amount is to be spent on the specific purposes for which it is collected. But the problem occurs when the collected amount is not spent on the specific purposes.

A parliamentary panel said that against a total amount of Rs. 86440 cr cess was collected till the end of the FY 2017-18 only Rs.29645 cr was transferred to the fund. It means the cess fund is being used for other purposes.

For example; National Clean Energy Fund was created out of cess on coal produced in the country and imported. But this cess is used in the centre’s Namami Gange, Green India Mission and the National Solar Mission. During the period 2015-16-2017-18; Rs. 19013 cr was allocated for these programmes.
It is shocking that Madhyamik and Uchchtar Shiksha Kosh has remained dormant as of March 2018. Moreover, data from the 2017-18 annual financial audit of government finances conducted by the Comptroller and Auditor General (CAG) show that Rs. 94,036 crore of SHEC proceeds is lying unutilised in the CFI.

Taxes in democratic societies indicate the presence of a collective socio-economic vision aimed at improving livelihoods.Since a cess is introduced with a specific purpose, it is unjustified when the proceeds remain unutilized for so many years. It is high time that the government immediately begins utilizing cess proceeds. Importantly, it should also publish an annual account of the manner in which they have been utilized.

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