Q. Consider the following statements regarding Cess and Surcharge in India:
1.Cess is levied for a specific purpose and the revenue from it is shared with the States based on the Finance Commission’s recommendations.
2.Surcharge is levied on the base tax and its proceeds are retained exclusively by the Union Government.
Which of the statements given above is/are correct?
Answer: B
Notes:
Explanation:
- While cess is levied for a specific purpose (like education or sanitation), its revenue is not shared with the States. It is credited to the Consolidated Fund of India, unless a separate fund is created by law.
- Surcharge is levied on the base income tax, especially on higher-income individuals and companies. Its proceeds remain with the Union Government and are not shared with States as it is outside the divisible pool.
Source: Indian Economy (N.C.E.R.T)
