A cess is a tax levied for a specific and earmarked purpose, imposed over and above existing taxes.
Key features:
- Levied only until the intended objective is met
- Not shared with States
- Revenue is earmarked for a defined purpose
Constitutional Basis
- Cesses are excluded from the divisible pool under Article 270
- Recognised under Articles 270 and 277 of the Constitution
- Revenue from cesses is retained by the Union
Significance
- Introduces a dedicated funding mechanism for security and health
- Targets non-essential goods to minimise public burden
- Enhances fiscal predictability for strategic expenditure
- Strengthens enforcement against tax evasion in high-risk sectors
