NEW DELHI: Amidst the ongoing farmers' agitation, Finance Minister Nirmala Sitharaman on Monday imposed agricultural infrastructure cess on a host of commodities from petrol to alcohol to gold and silver, ostensibly to raise money for agricultural infrastructure.
While the new impost will not raise costs for the consumers as central excise and customs duties are being cut back to accommodate the new cess, the rearrangement of taxes means that states will receive less money from the central coffers as central excise and customs duties is divided between the Centre and the states according to a formula devised by the finance commission.
While the exact amount of money which the states will lose out is yet to be worked out, official say that some Rs 30,000 crore will come from the new cess. This year the total income from central excise and customs duty stood at Rs 4.73 lakh crore.
Cesses imposed by the centre like the education cess, road and infrastructure cess and sugar cess go only to the central coffers and the states get no part of monies raised through such cesses. To accommodate the new Agriculture Infrastructure and Development Cess (AIDC) of Rs 2.5 a litre on petroleum, the Government has cut the basic excise duty on petrol from Rs 2.98 to Rs 1.4. To accommodate a similar AIDC of Rs 4 on diesel, the basic excise has been cut was cut from Rs 4.83 to Rs 1.8 a litre.
A similar 'adjustment’ has been made for alcoholic beverages that currently attract 150% basic customs duty. That basic import duty has now been cut drastically to 50%, even as the Budget has proposed an AIDC of 100%. While the tippler will continue to pay the same price for alcoholic beverages, the states will lose out on their share of customs revenues. Among other products affected by the AIDC are gold and silver where a 2.5% cess has been imposed, crude palm oil (17.5%), apples (35 per cent), 'coal, lignite and peat' (1.5%), fertilizers, including urea (5%), and cotton (5%).
WATCH: Expert Take | 'The budget lacks in confidence, we are under-investing'