Consider the following statements about cess:
1. Cess is Tax on Tax
2. Cess is credited to Public Account of India
Which of the following statements is/are correct?

1 only

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2 only

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Both 1 and 2

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Neither 1 nor 2

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Solution

The correct option is A 1 only
Cess means a tax that is imposed for an earmarked purpose and the proceeds collected have to be used for that earmarked purpose only. Tax revenue from Cess are first credited to the CFI and the Central Government may, after due appropriation made by Parliament, utilise the money for the specified purposes.

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Similar questions

With reference to Cess, consider the following statements:

1. Proceeds of Cess are distributed on the recommendation of Finance Commission.

2. Cess before levying needs to be passed through parliament by a simple majority.

3. Cess is earmarked for a particular purpose only and cannot be used for any other purpose.

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