Budget 2016: New cesses on the anvil

The Hindu Business lIne

http://www.thehindubusinessline.com/economy/budget/budget-2016-new-cesses-on-the-
anvil/article8296762.ece

NEW DELHI, FEBRUARY 29:

The Finance Ministry has proposed three new cesses in the Union Budget. Proceeds from the
proposed Krishi Kalyan Cess – 0.5 per cent on all taxable services – would be exclusively used for
financing initiatives relating to improvement of agriculture and welfare of farmers.

The cess, which will come into force from June 1, 2016, is expected to raise ₹5,000 crore for the
Centre in 2016-17. An input tax credit will be available for payment of this cess.

Incentivising clean air

Expressing concern over the pollution and traffic in Indian cities, the Finance Minister also proposed
an infrastructure cess of 1 per cent on small petrol, LPG and CNG cars; 2.5 per cent on diesel cars
meeting certain specifications and 4 per cent on other higher engine capacity vehicles and special
utility vehicles (SUVs). The government expects to raise ₹3,000 crore next year through this cess.

The Finance Minister also proposed to rename the ‘Clean Energy Cess’ levied on coal, lignite and
peat as ‘Clean Environment Cess’ and simultaneously increased its rate from Rs. 200/tonne
to Rs. 400/tonne. Through this cess, the government expects to raise ₹26,148.2 crore, up from
₹12,623 crore this year.

Poor performers to go
The Finance Minister also proposed to abolish 13 cesses, which generate revenues of less than ₹50
crore per year. According to data in the budget documents, cesses raising below ₹50 crore in 2015-16
(revised estimates) includes education (₹44 crore), secondary and higher education cess (₹22 crore),
salt (₹5 crore), mica (₹2.73 crore), iron, manganese and chrome ore (₹16.7 crore), limestone and
dolomite (₹15.98 crore), cine workers (₹1.93 crore), cess under other accounts (₹9 crore), and cess
collection on textiles and textile machinery (₹1 crore). Together, they amount to ₹118.34 crore.