Cess–A boost to digitisation, transformation

Taxes are collected by the government to run the country, while Cess is a tax that is levied by the government to raise funds for a specific purpose. There are multiple types of Cess in our country. Namely, Education Cess, Clean Environment Cess, Construction Cess, Road Cess, Universal Service Obligation Fund(USOF), Swachh Bharat Cess and Krishi Kalyan Cess (KKC).

Education cess
Education cess was introduced to provide and finance universalized quality basic, secondary and higher education. The Education Cess comprises 2 per cent Primary Education Cess and 1 per cent Secondary & Higher Education Cess. The Primary Education Cess is credited to Prarambhik Shiksha Kosh (PSK) and is used to meet part of expenditure on Sarva Shiksha Abhiyan (SSA) & Mid Day Meal (MDM) Schemes.

According to the sources, it has collected Rs 20,165 crore through education cess by the end of January 2016. The Primary Education Cess netted Rs 1,54,818 crore from 2004-05 to 2014-15. Of this, Rs 13,298 crore is lying dormant.

Even though government is taking substantial measures to improve the basic infrastructure and digitalizing the class rooms in govt. schools. By utilizing the above amount the basic amenities like transportation should also be improved by providing school buses in the rural areas, because the Mandal parishad schools, Zilla parishad schools and Municipal schools are sometimes far away from the villages with no schools.

This can also improve the admissions in the government schools and literacy rate can also be increased and more over employment opportunities can be provided to the drivers and semi skilled labors.

Clean Environment Cess formerly Clean Energy Cess
This cess was introduced on coal as Rs 50 per tonne in the 2010 budget. When it was doubled from Rs 100 per tonne to Rs 200 per tonne last year, it was estimated to contribute about Rs 13,000 crore to National Clean Energy Fund (NCEF) every year, the entire budget allocation for Ministry of New and Renewable Energy for this year was Rs 5,000 crore, Which is proposed to come from NCEF.

At the end of last fiscal year, the NCEF, which gets contributions by the Cess on coal, had almost Rs 17,000 crore in its kitty. India produces coal in excess of 600 million tonnes a year. It imports about 150 million tonnes every year to meet its demand. The Cess applies to imported coal as well.

Recently, GAIL and Bloom energy has also joined in the clean energy cess to deploy natural gas-based fuel cell technology to generate electricity with lower emission levels. The Clean environment Cess plays a keen role in generating electricity from the waste material.

Construction Cess
The real estate and construction industry should use construction cess to skill its labour force and improve productivity, said a govt. official under ministry of labour & employment.

Accordingly, Rs. 26,000 crore collected from various real estate and construction firms as Cess over the last two decades has been lying idle and could be utilized for providing skills to the labour force. Even though the government is taking substantial measures as a part of Skill India – Initiative, It is emerging and imparting the skills in the individual workers.

Meanwhile, Private construction and Real-Estate companies should also come forward and begin to skill the labour they engaged to fulfill their construction needs, which in turn will also improve the quality of construction. So that skilled people can be employable in any industry including real estate and construction.

Road Cess
Road cess was contributed to the Central Road Fund (CRF) which imparts Rs 8,000 crore is collected by levying Rs 2 per litre on petrol and diesel as Cess. In the Recent budget 2016-17, The Union shipping ministry has proposed utilising 5 per cent of Central Road Fund for developing inland waterways.

The Union government has an ambitious plan to tap vast network of rivers and canals stretching 14,500 km for moving goods as well as people. Annually around Rs 8,000 crore is collected by levying Rs 2 per litre on petrol and diesel as Cess. This fund is not only utilised for construction and maintenance of roads but also rail over and under bridges with the Indian Railways. This Cess can be used for Transforming India.

Universal Service Obligation Fund(USOF)
Which is managed by the Department of Telecommunications, Ministry of Communications, Government of India. According to the USOF official Website, The Total Potentially available fund Rs 47411.56 cr. Rural India can be effectively connected through a reliable and ubiquitous telecommunications network, and access within their reach and within their means.

The objective of USOF is to extend the Network & stimulate uptake of the ICT services as a part of the fulfillment of the Digital India transformation.

Krishi Kalyan Cess (KKC)
Krishi Kalyan Cess is noble with an intent to improve overall agrarian economy, which contributes around 16 per cent to Indian GDP. It is at 0.5 per cent on all taxable services during Budget 2016. Effective date of Krishi Kalyan Cess is 1st June 2016.

Swachh Bharat Cess
It is directly under the control of the central government. The money raised through this cess is being deposited into the Consolidated Fund of India, which means that the central government will decide on how it is to be spent, as 0.5 per cent Swachh Bharat Cess which is imposed on all taxable services.Swachh Bharat Cess is utilized for cleanliness and construction of toilets in the rural and urban areas.

By: Kaushik Sanganabhatla
The writer is Technical Officer, IIIT