Share of Cesses & Surcharges in Gross Tax Revenue Falls to 14.5% in 2023-24, But Still Much Higher Than in 2011-12

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TL;DR
The share of cesses and surcharges in the Union Government’s tax revenue has seen a sharp rise over the past decade, peaking during the pandemic. While their share in gross tax revenue has declined in recent years, concerns remain about the impact on state finances, transparency in fund utilisation, and the overall balance of fiscal federalism.

Context
Cesses and surcharges are special-purpose taxes imposed by the Union government. Unlike other taxes, their proceeds are not shared with states, meaning any increase in their share reduces the pool of funds available to state governments. Over the last decade, their increasing prominence sparked debate over fiscal centralisation.

Who compiles this data?
Data on cesses and surcharges is published by the Ministry of Finance. It can be found in Union Budget documents, Finance Commission reports, and Parliamentary replies.

Where can I download clean & structured data related to Cesses & Surcharges?
Clean, structured, and ready-to-use datasets related to cesses and surcharges levied in India can be downloaded from Dataful. These include data on gross tax revenue, cess and surcharge collections, GST compensation released to states, and central excise duties on petrol and diesel.

Key Insights

Why does it matter?
A higher share of cesses and surcharges restricts the fiscal space available to states by reducing the divisible tax pool. This undermines federal fiscal equilibrium and may impair states’ ability to invest in essential public services like education, health, and welfare. Both the Finance Commission and the CAG have raised concerns previously, highlighting not only the imbalance in revenue sharing but also the under-utilisation of these funds, which points to issues of transparency and accountability.

Key numbers