About 40% of cess receipts parked in CFI instead of relevant reserve funds: CAG

By: |
September 24, 2020 6:20 AM

Under the scheme, such cesses and levies are required to be first transferred to designated Reserve Funds and utilised for the specific purposes intended by Parliament.

“Social Welfare Surcharge” on Customs amounting to Rs 8,871 crore was levied but not dedicated fund for the same was envisaged.“Social Welfare Surcharge” on Customs amounting to Rs 8,871 crore was levied but not dedicated fund for the same was envisaged.

Pointing out lack of transparency and disclosures with regard to accounting of cesses and levies, the Comptroller and Auditor General of India (CAG) told Parliament on Wednesday that the Centre has only transferred Rs 1.64 lakh crore or 60% of the proceeds from cess/levies in FY19 to the relevant reserve funds and retained the balance in the Consolidated Fund of India (CFI).

The Centre had collected Rs 2.75 lakh crore from 35 cesses/levies in FY19. Under the scheme, such cesses and levies are required to be first transferred to designated Reserve Funds and utilised for the specific purposes intended by Parliament. “Social Welfare Surcharge” on Customs amounting to Rs 8,871 crore was levied but not dedicated fund for the same was envisaged. Non-creation/non operation of Reserve Funds makes it difficult to ensure that cesses and levies have been utilised for the specific purposes intended by the Parliament,” CAG said in its analysis the Union Government Finance Accounts for FY19.

It may be noted that in recent years, the Centre’s cess receipts have surged due to hike in rates and new imposts and this has helped it to cushion the blow from the higher transfers to the states from the divisible pool of taxes under the 14th Finance Commission recommendations.

“During the year, GST Compensation Cess of Rs 40,806 crore was short credited to the related Reserve Fund; Rs 10,157crore of the Road and Infrastructure Cess collected during the year was neither transferred to the related Reserve Fund nor utilised for the purpose for which the cess was collected.”

In addition, Rs 1,24,399 crore, representing the Cess on crude oil collected in the last decade, had not been transferred to the designated Reserve Fund (Oil Industry Development Board) and was retained in CFI, it said. Other short transfers to designated reserve funds included Rs 2,123 crore in the case of Universal Service Levy and `79 crore in the case of National Mineral Trust Levy.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Businesses may face corona effect even after normalcy; 4 forces that may change rules of the game
2Jute bags shortage to hinder govt’s kharif procurement
3Salvaging act: States curbed spending in FY20 to rein in deficit at budgeted 2.6%