Do you know the difference between Cess and Surcharge in India | UPSCPrep.com

Do you know the difference between Cess and Surcharge in India?

Let us break it down for you in this thread.

Cess is charged on the tax amount for a specific purpose, while Surcharge is applied on the payable tax and can be used for any purpose by the government.

Cess is aimed at public welfare and is collected from all taxpayers, whereas Surcharge seeks to tax high-earning individuals and is collected only from those who earn more than 50 lakhs per annum.

The rate of Cess is fixed at 4%, while Surcharge can vary between 10%, 15%, 25%, and 37%.

Cess tax goes to the Consolidated Fund of India (CFI), and its usage is restricted to the specific purpose for which it was collected.

The Surcharge tax also goes to the CFI, but its usage is not restricted, and the government can use it as it deems fit.

Cess and surcharge are central taxes not devolved to states in India. However, revenue from specific cess or surcharge may be allocated to states for specific purposes via the Finance Commission.

Wondering what types of Cess are there in India?

Health Cess, Education Cess, Tobacco products, Road and Infrastructure Cess, and Swachh Bharat Abhiyan Cess are a few examples.