New Delhi: It has been a constant complaint or perception of the supporters of the Narendra Modi government that it has carried forward the Sonia Gandhi-led UPA government’s legacy of cesses on several goods and services. The fact is that the government has abolished one cess after another so that a unified goods and services tax (GST) could be introduced to replace various taxes on businesses.
The Modi government in the last 3 General Budgets — 2015-16, 2016-17 and 2017-18 — has gradually abolished various cesses on goods and services in order to prepare the ground for smooth roll-out of GST from 1 July 2017. The government has taken this step in stages by abolishing various cesses so that it is easier to fit in various goods and services in different tax slabs for GST.
The Union government in its Budget 2015-16 had abolished education cess, including secondary and higher education cess on taxable services and exempted education cess on excisable goods as well as secondary and higher education cess on excisable goods.
In its Budget 2016-17, the government abolished cess on cement, strawboard, 3 cesses including cess on Iron ore mines, manganese ore mines and chrome ore mines by amending Labour Welfare Cess Act, 1976, tobacco cess by amending the Tobacco Cess Act 1975, and cine workers welfare cess by amending the Cine Workers’ Welfare Cess Act 1981 among others.
In its Budget 2017-18, the government abolished research and development cess by amending the Research and Development Cess Act.
Through the Taxation Laws Amendment Act 2017, the following cesses have been abolished. However, the date of the implementation will coincide with the date of the GST roll-out.
- The Rubber Act 1947 — Cess on Rubber
- The Industries (Development and Regulation) Act 1951 — cess on automobile
- The Tea Act 1953 — cess on tea
- The Coal Mines (Conservation and Development) Act, 1974 — cess on coal
- The Beedi Workers’ Welfare Cess Act 1971 — cess on beedis
- The Water (Prevention and Control of Pollution) Cess Act 1977 — cess levied on water consumed by certain industries and by local authorities
- The Sugar Cess Act 1982, the Sugar Development Fund Act 1982 — cess on sugar
- The Jute Manufacturers Cess Act 1983 — cess on jute goods manufactured or produced or in part of jute
- The Finance (2) Act 2004 — education cess on excisable goods
- The Finance Act, 2007 — secondary and higher education cess on excisable goods
- The Finance Act 2010 — clean energy cess
- The Finance Act 2015 — Swachh Bharat cess
- The Finance Act 2016 — infrastructure cess and Krishi Kalyan cess
However, the following cesses will continue to be levied under the GST regime as they pertain to customs or goods that are not covered under the GST regime.
- The Finance (2) Act 2004 — education cess on imported goods
- The Finance Act, 2007 — secondary and higher education cess on imported goods
- Cess on Crude Petroleum Oil under the Oil Industry Development Act, 1974
- Additional duty of excise on motor spirit (road cess)
- Additional duty of excise on high-speed diesel oil (road cess)
- Special additional duty of excise on motor spirit
- NCCD on tobacco and tobacco products and crude petroleum oil