More Than A Quarter Of Tax Collected Remains Unutilized For The Intended Purpose
‘Swachh Bharat Cess’ is the latest addition to the growing list of cess collected by the government under various names. The Swachh Bharat Cess at the rate of 0.5% is being levied on all services, which are presently liable to service tax. According to the government, the proceeds from this cess will be exclusively used for Swachh Bharat initiatives. While it might sound like a laudable step, the history of utilization of cess collected under various names does not inspire much confidence. The data on cess collected and spent reveals that more than a quarter of the cess collected under various heads remains unutilized for the intended purpose.
Cess for various purposes
Government collects Cess under various names, apparently for a specific purpose. Some of the different Cess collected by the government are explained below.
Universal Service Obligation Fund: The Universal Service Obligation (USO) Fund was set up in April 2002 for achieving universal service objectives emphasized in the National Telecom Policy (NTP) 1999. The Indian Telegraph Act 2003 gave statutory status to the USO Fund and laid down that the fund is to be utilized exclusively for meeting the Universal Service Obligation by providing access to basic telegraph services like public telecommunication and information services and household telephones in rural and remote areas. It also envisaged creation of infrastructure for mobile services in rural and remote areas, broadband connectivity to villages in a phased manner and induction of new technological developments in the telecom sector in rural and remote areas etc. The resources for meeting the USO Fund are raised through a ‘Universal Access Levy’ (UAL).
Research & Development Cess Fund: The Research and Development Cess Act was enacted in 1986 to provide for the levy and collection of a cess on all payments made for import of technology to encourage commercial application of indigenously developed technology, for adapting imported technology to wider domestic. The Act enables the creation of a Fund for Technology Development and Application to be administered by Technology Development Board (TDB) under the Department of Science & Technology.
Primary Education Cess: A non-lapsable fund for elementary education known as Prarambhik Shiksha Kosh (PSK) was created in 2005-06. The Primary education cess was imposed by the Finance Act in 2004 and the PSK is primarily funded by the cess. This fund is meant to meet the expenditure requirement for elementary education under the schemes of Sarva Shiksha Abhiyaan and Mid-Day Meal Scheme.
Secondary and Higher Education Cess: The Secondary and Higher Education Cess (SHEC) was introduced in the Finance Act, 2007 to fulfill the commitment of secondary and higher education.
National Clean Energy Fund: National Clean Energy Fund (NCEF) was established in 2010-11 for funding research and innovative projects in clean energy technology by levying a clean energy cess on coal produced in India and imported coal.
Central Road Fund(CRF): The cess on petrol and high speed diesel, collected as per the provision of the CRF Act, 2000, is utilized for development and maintenance of National Highways, development of rural roads, development and maintenance of other state roads including roads of inter-state and economic importance and for improvement of safety at rail- road crossings, etc.
Cess on Feature Films: Under the Cine Workers Welfare Fund Act, 1981, the cess collected from the producers of feature films is used for the welfare of cine workers on welfare activities like a Group Insurance Scheme for cine workers, health care facilities including financial assistance for treatment of heart diseases, kidney transplantation and treatment of cancer, and financial assistance for education of the children of cine workers from first standard to professional degree classes.
Cess on Tea: The Proceeds from this cess would fund the development of Tea Sector.
Transfer/Utilization of the Collected Cess
Each of the above Cess is collected by the government and is then supposed to be transferred to the specific fund setup for the purpose. But according to the latest Annual audit report of the CAG, significant portions of the cess remains unutilized and not transferred to the fund/kosh setup for the purpose intended for.
Out of the 66117 crore rupees collected under the USO, only 26983 crores has been transferred to the USO fund. Large part of the Cess collected for Primary Education & Central Road Fund have been transferred or utilized. The status of the Secondary & Higher Education Cess is unknown since no fund was designated to deposit the proceeds of this cess. No scheme was also announced that would be funded by this cess. In the absence of such information, the CAG report feels that the diversion of funds cannot be ruled out.
100% of the funds collected under the Cess on Tea remained unspent for 2014-15 while 60% of the funds under USO collected since inception remain unspent. Close to 80% of the cess collected for research and developed also remains unutilized.
With such a track record, it is difficult to believe that the Swachh Bharat Cess would be utilized for the specified purpose.