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Unable to Make Ends Meet, Government to Scrap Cess on Products

The cost of collection of cess on jute was more than the tax collected by the government in 2013-14 and 2014-15.

Published: 24th April 2016 09:10 AM  |   Last Updated: 24th April 2016 10:27 AM   |  A+A-

NEW DELHI: The cost of collection of cess on jute was more than the tax collected by the government in 2013-14 and 2014-15. In 2013-14, government lost about Rs 218 crore and in 2014-15, losses went up to Rs 285 crore while collecting cess on jute.

Concerned over such bizarre situation, in March this year, the government had announced a plan to abolish tax on 27 products, where cost of collection was more than the tax collected by the authorities. Subsequently, the proposal was sent to Cabinet secretary PK Sinha for further examination, who reviewed the cess lists submitted by various ministries. The Sunday Standard has access to the government note, which has finalised 24 products including jute, woolen fabrics, matches, art silk fabric, cotton fabric and vegetable oils, where taxes likely to be abolished by June as collection is not enough to cover the expenditure on the tax recovery process.

According to the note, government has not been able to earn any cess revenue from handloom cess on rayon and art silk fabric. It says, in 2013-14, the amount collected on rayon was Rs 5 lakh, but it was zero amount in 2014-15. Similarly cess on electricity generated was just Rs 5000 in 2013-14, but failed to get revenue of even a single penny in 2014-15.

Interestingly, the collection of handloom cess on cotton fabrics in 2013-14 resulted in loss of Rs 17 lakh but in 2014-15, it managed to generate Rs 1000. The cess on condenser in 2013-14 generated zero revenue, but it has managed to collect Rs 2,000 in 2014-15, which in fact is even embarrassing for the authorities.

There are some more interesting revelations in the government note, which suggests that cess collection on MICA product was just Rs 8000 in 2014-15, further down from total collection of Rs 12,000 in 2013-14. MICA is kind of mineral, which is generally used in makeup products.  Similarly, collection of handloom cess on manmade fabrics was just Rs 32,000 in 2014-15, while tax collected on matches was Rs 1 lakh.

In 2013-14, tax collection on matches could not recover the expenditure resulting in loss of Rs 1.27 crore. Then there is cess on COPRA-dried coconut, which earned government Rs 3 lakh in 2014-15 and cess on vegetable oils that generated Rs 4 lakh. Among the cess that will be abolished also includes cess on tobacco that generated Rs 44 lakh, cess on coffee, which earned Rs 72 lakh, cess on straw board, where collection in 2014-15 was Rs 1 lakh.

The government also plans to abolish cess on Cine Workers Welfare Fund, which generated Rs 1.73 Crore, cess on feature films, which shows total collection of Rs 2.75 Crore and cess on salt that earned Rs 4.32 crore as tax collection in 2014-15.

There are only three products which have managed to generate substantial amount of revenue, but they too fall below the threshold of Rs 50 crore set by the government.

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