Possibility of COVID Cess in Budget 2021.

There are debates about what the FM has in store for the Taxpayers with Budget 2021 round the corner & one of the talks doing rounds is a COVID-19 Cess.

Let's have a short explanation of what and how this definition of Cess works exactly.

Article 270 of the Indian Constitution confers on the Union the power to increase its revenue by levying a cess.

In the name of cess for revenue generation, the Government may collect tax, but it shall be allocated for specific purposes only.

A significant point to be noted is also that central cess collections are not shared under revenue devolution with states.

Swachh Bharat Cess (SBC) was declared in the 2015 budget, while we came across Krishi Kalyan Cess (KKC) in the 2016 budget the following year. Such and many other cess were implemented in previous years as and when necessary. Once the function was fulfilled, these were abolished later.

The only functioning cess is a 4 percent Health and Education Cess at present. This is assessed on the sum of the tax as determined on the basis of the rates in place.

The Centre is likely to bear the cost of the vaccination programme for COVID-19 that started yesterday. The levy of COVID 19 cess would assist government in raising funds for this cause faster and earmarked.

Let's see what happens once the 2021 Budget is on the table on February 1, 2021!


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