The central government is considering hiking health and education cess by up to 2% to fund healthcare expenditure, a CNBC-TV18 report said quoting sources. The report said that the Revenue Department of the Finance Ministry is reviewing such a proposal currently and deliberations are underway.
At present, taxpayers are liable to pay 4% health and education cess on the direct income tax; irrespective of the income tax slab. The CNBC-TV18 report citing sources said that a hike of up to 2% may be announced by Finance Minister Nirmala Sitharaman when she presents the Union Budget 2021-22 on 1 February.
The health and education cess, which garners around Rs 30,000 crore, will be increased to help provide health insurance cover under Ayushmaan Bharat.
Ayushman Bharat or Pradhan Mantri Jan Arogya Yojana was launched in 2018, provides annual health cover of Rs 5 lakh per family to those among the poor and vulnerable sections of the society as per the SECC 2011 data, which is approximately 40% of the Indian population. With the outbreak of COVID-19, health insurance cover is of priority to improve access to medical treatment for all.
Earlier this month, an ET report said that as part of the preliminary talks on revenue-raising measures to make for COVID-19 losses, the Finance Ministry was contemplating a small cess on taxpayers who fall under the high-income bracket and some indirect taxes.