Income Tax: The government is preparing to impose Covid CESS to increase revenue
The Union Government is scheduled to present the Union Budget for the year 2021-22 in Parliament on February 1. It is expected to impose a one-time Covid-19 relief cess of up to two per cent. The country’s economy has been hit hard by the Corona virus epidemic and revenue is needed to restructure it. Expenditure on controlling the epidemic has risen unprecedentedly this year, forcing the government to generate revenue.
It is said that the imposition of one-time Covid-19 relief CESS of up to two per cent is being actively considered by the finance ministry and is likely to be approved. This covid CESS is expected to be levied on taxable income of Rs 10 lakh or more. This covid-cess will be in addition to the existing two per cent cess imposed for health and education. From this, the government estimates that revenue of Rs 12,000 crore could be generated. The idea for the cess was suggested by the Indian Revenue Service Organization in a policy document late last year.
The cost of Covid-19 vaccination is being borne by the Central Government. However, the cost of Covid 19 vaccine distribution, manpower training and logistics is on the state government. The central government can get funds very quickly through Covid cess. If the central government levies these costs in the form of direct taxes, there may be antagonism. At the same time, the central government has to give a part of this to the state government. But the amount coming from the cess belongs entirely to the central government.
The Corona vaccine rollout is estimated to cost at least Rs 60,000 to Rs 65,000 crore. The government’s fiscal deficit is projected at Rs 14.5 lakh crore in the current financial year.