Cess: Levied for a specific purpose or fund, such as education, health infrastructure, or road development. Example: Education Cess, Health and Education Cess.
Surcharge: Levied to raise additional revenue from high-income individuals or entities, without linking it to any specific purpose. Example: Surcharge on Income Tax for individuals earning over ₹50 lakh or ₹1 crore.
Cess: Can be applied to all taxpayers (individuals, companies, etc.) based on certain taxes like income tax, GST, etc.
Surcharge: Generally imposed on high-income individuals or companies who fall under higher tax brackets.
Cess: Calculated as a percentage on the basic tax amount (not including surcharge).
Surcharge: Calculated as a percentage on the total tax liability, excluding cess.
Cess: Amount collected must be used only for the specified purpose. It goes into a dedicated fund (e.g., Prarambhik Shiksha Kosh for education).
Surcharge: Amount collected goes into the Consolidated Fund of India and can be used for any general purpose.
Cess: Not shared with state governments. It is entirely retained by the Central Government.
Surcharge: Also not shared with states — this is a key reason for criticism by state governments.
Cess: Levied under specific Acts of Parliament (e.g., Clean Energy Cess under Finance Act).
Surcharge: Imposed under the Income Tax Act, and its rates can be revised in the Union Budget.
|
Feature |
Cess |
Surcharge |
|---|---|---|
|
Purpose |
Specific (education, health, etc.) |
General revenue enhancement |
|
Applicability |
All taxpayers |
High-income taxpayers/companies |
|
Calculation Base |
On basic tax |
On total tax (excluding cess) |
|
Usage |
Only for earmarked purposes |
For any central expenditure |
|
Shared with States |
No |
No |
|
Legal Basis |
Special Acts |
Income Tax Act |
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