The Central government may impose a COVID-19 cess or surcharge in the Union Budget to fund expenses incurred due to the coronavirus pandemic. A final decision will be taken closer to the day of the Budget — February 1.

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These expenses include those incurred on vaccine rollout, which, as per estimates, have been pegged at Rs 60,000-65,000 crore.

In case the COVID-19 cess or surcharge is imposed, it will be the latest in the line of measures taken by the government to boost revenue. Over time, the government has implemented several policies to either increase collections or reduce spending. According to a report in The Economic Times, preliminary talks have been around imposing a cess on high-income earners and proposals for an additional levy on petroleum and diesel.

This apart, the industry does not want any new taxes to be levied because the economy is reeling stress. India’s April-November fiscal deficit soared to Rs 10.75 lakh crore of the 2020-21 Budget Estimates (BE). One of the major reasons for this was the low realisation of revenue due to disruption in business activities during the pandemic.

India will start its COVID- 19 vaccination drive from January 16 in two phases. In the first phase, about 30 crore people are likely to be vaccinated. Another 50 crore people will get the vaccine in phase two. While the Centre is likely to bear the cost of vaccination, states will have to take care of distribution and training personnel to carry out the drive.

To support the economy in the next fiscal, the government is also likely to incur additional spending on infrastructure, rural economy and Atmanirbhar Bharat Rojgar Yojana.

Cess is a way of generating funds fast. Also, central cess collections are not shared with states. As revenues fell during the pandemic, many states imposed cess on their taxes. While Jharkhand imposed COVID-19 cess on minerals, Punjab, Delhi and Haryana imposed additional taxes on liquor.

(Edited by : Aditi Gautam)

First Published:Jan 11, 2021 2:43 PM IST