Tamil Nadu demands merger of cesses and surcharges


Deputy CM O. Panneerselvam, who holds the Finance portfolio, said though revenue to the Centre on account of levies on petrol and diesel saw a growth of 48% between April and November 2020, TN had received 39.40% less in the corresponding period as its share

Deputy Chief Minister O. Panneerselvam on Tuesday urged the Centre to merge all cesses and surcharges with a basic rate of taxes and ensure that States received their legitimate share of revenue.

Presenting the interim budget in the State Assembly, Mr. Panneerselvam, who holds the Finance portfolio, said though revenue to the Centre on account of various levies on petrol and diesel saw a growth of 48% between April and November 2020, Tamil Nadu had received 39.40% less in the corresponding period as its share of Union excise duties on petrol and diesel.

Recalling his request for merging all cesses and surcharges in the pre-budget meeting in January, he said despite this, the agriculture infrastructure cess levied in the Union Budget had further reduced the basic excise duty on petrol and diesel.

Mr. Panneerselvam pointed out that while the levy of surcharge on personal income tax, first introduced in 2013-14 and further expanded and increased since, had become a big revenue earner for Centre, there was no increase in the share for the State. He said these measures including reduction in the basic customs duty on gold, silver, alcoholic beverages, crude edible oil, coal, lignite, pears, apples, varieties of pulses and specialised pulses, which had been substituted by agricultural infrastructure development cess, had further shrunk the divisible pool of taxes.

Citing the report of the 15th Finance Commission that the cesses surcharges as a percentage of gross tax revenue of the Centre had grown from 10.4% in 2011-12 to 20.2% in the revised estimates in 2019-220, he said it had not made any categorical recommendation for merging cesses and surcharges. He said this was very disappointing to many States including Tamil Nadu that had demanded merger of cesses and surcharges in the basic rate of tax or their inclusion in the divisible pool.

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