Cess Controversy: Allegations of State Deprivation in Tax Sharing

Trinamool Congress MP Derek O'Brien has raised serious concerns over the lack of distribution of cess tax collections to states, referring to the practice as 'loot.' His remarks, posted on social media platform X, highlight that cess constitutes 26% of Gross Tax Revenue, yet is not shared with states.

O'Brien pointed out the significant increase in the proportion of cess, which grew from 10% in 2011 to 26% in 2022, suggesting that states are being deprived of their rightful revenue share. His comments come in the wake of the GST Council's decision to implement a new two-tier tax rate structure from September 22.

This development follows concerns from opposition-ruled states regarding the revenue implications and the absence of a compensation mechanism, although a consensus was reached to reduce tax rates for the benefit of the general public.

(With inputs from agencies.)