Cess Mop-Up
Govt's cess, surcharge mop-up rose 42% between FY21 and FY26, says finance ministry
This story was originally published at 15:24 IST on 29 July 2025
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NEW DELHI – The government's collections from cess and surcharges surged 42% over the last six financial years, the finance ministry said Tuesday. The government has projected collections from cess and surcharges to total INR 5.91 trillion in 2025-26 (Apr-Mar), compared to INR 4.15 trillion collected in FY21.
On a year-on-year basis, the government's collections from cess and surcharge in FY26 is projected to be 9.4% higher than the INR 5.40 trillion collected last year.
The increase in share of cess and surcharge is important as these are not shared with states as part of the divisible pool. Imposed for specific needs, the proceeds go towards meeting those specific requirements such as financing of centrally sponsored schemes. "The benefits of such expenditure also percolate to the states," Minister of State for Finance Pankaj Chaudhary said in a written response to the Rajya Sabha Tuesday.
The government's data on cess and surcharge collection come at a time when there is rising discomfort among states, especially the Opposition ruled states, who argue that the current dispensation is pushing more taxes towards cess and surcharge, thereby shrinking the government's divisible pool. According to the 15th Finance Commission, the Centre has to transfer 41% of the tax collected to states as their share in the FY21-FY26 period.
Data, however, shows that the share of cess and surcharge in the total tax collected by the Centre has come down in the FY21-FY26 period. In FY21, cess and surcharge made up 20.5% of the total tax collected by the Centre and in FY26, the share is projected to shrink to 13.8%. The government has projected its total tax collections to grow 10.8% to INR 42.70 trillion in FY26. End
Reported by Priyasmita Dutta
Edited by Ashish Shirke
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