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Why Govt. May Announce Covid 19 Cess In Union Budget 2021?

Why Govt. May Announce Covid 19 Cess In Union Budget 2021?

Experts are of the view that government in Union Budget 2021 may announce coronavirus cess or surcharge on individual taxpayers. As it is the budget that is scheduled to be announced few hours from now is cited as the most crucial in recent years as it comes in the backdrop of massive economic destruction caused by the Covid 19 outbreak. The finance minister Nirmala Sitharaman will come up with the Budget announcements at 11 am, which will be Modi 2.0 government's third Budget.

 

A cess or surcharge is levied for generating revenue stream for a particular purpose and once that purpose is met, it is withdrawn. The centre, in accordance with Article 270 of the Constitution of India, is bestowed with powers to increase its revenue by levying cess, but it needs to be earmarked and has to be for a particular purpose only. This mop up serves as an additional tax besides what the government otherwise collects.

Why there is a high possibility of Covid 19 cess being introduced in Budget 2021?

In the views of Amit Maheshwari, Tax Partner, AKM Global -- a consulting firm, "The Centre is likely to introduce such cess in Budget 2021 to bear the cost of COVID-19 medical programmes, COVID-19 kits, health tests and vaccination programmes, which will be increased this year especially when we are one of the populated countries in the world and then will get abolished once the purpose is served within a year or two".

This cess could be levied on taxpayers falling in the higher income slab or businesses with specified turnover. Importantly, such central cess isn't shared with states under revenue devolution.

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