Tax Revenue, Cess and Surcharge

Category: Indian Economy / Public Finance / Taxation

Tax Revenue

Revenue collected by governments through:

  • Direct taxes

  • Indirect taxes.

Cess

  • A tax imposed for a specific purpose.

  • Generally credited to the Consolidated Fund of India initially.

  • It is intended for the specified purpose.

Surcharge

  • An additional charge on an existing tax.

  • It is generally not part of the divisible pool shared with States.

Constitutional Relevance

Under Article 270, certain Union taxes are distributed between Centre and States.

However, cesses and surcharges are excluded from the divisible pool under the constitutional framework.

Prelims Trap

Cess ≠ Surcharge ≠ ordinary tax rate.