Cess, surcharge share doubles to 19.9% in FY21: Report
The share of cesses and surcharges in the gross tax revenue of the Centre has nearly doubled to 19.9 per cent in 2020-21 from 10.4 per cent in 2011-12
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Mumbai: The share of cesses and surcharges in the gross tax revenue of the Centre has nearly doubled to 19.9 per cent in 2020-21 from 10.4 per cent in 2011-12, leading to the 15th Finance Commission to recommend a higher grant-in-aid and lower tax devolution to the states, according to a report. Under the existing Finance Commission (FC) framework, the cesses and surcharges collected by the Centre are not part of the tax devolution. And, the massive spike in the same has forced the FC to suggest higher grant-in-aid to the states to compensate for the low growth in tax devolution which is pegged at 41 per cent during the operation of the 15th FC award, India Ratings said on Tuesday in the report.
The key reason for higher growth in grants-in-aid and lower growth in tax devolution to the states is the increase in the proportion of the central cess and surcharges as they are not part of the tax devolution to the states, said the agency's Principal Economist Sunil Kumar Sinha.
