Difference Between Cess and Surcharge

By K Balaji|Updated : November 29th, 2022

The major Difference Between Cess and Surcharge is that Cess is charged on the tax amount for a particular purpose; the Surcharge is applied on the payable tax and can be used for any purpose. Various Cess and Surcharges are there, such as Crude oil Cess, Swachh Bharat Abhiyan Cess, etc.

Difference Between Cess and Surcharge PDF

The Union Government in India collects revenue by levying various taxes on its citizens. When it comes to understanding this taxation system, both Cess and Surcharge might seem very similar to each other. Here, we will discuss the differences between cess and surcharge based on various factors, and we will discuss each in brief.

Difference Between Cess and Surcharge

The key difference between Cess and Surcharge is that Cess is collected from each citizen, whereas Surcharge is collected from citizens falling in specific criteria. Let us see the comparison of Cess and Surcharge in the table below.

Cess vs Surcharge

Difference Between Cess and Surcharge

Cess

Surcharge

Cess is calculated over and above the base tax charge of the taxpayer.

The Surcharge is levied on the payable tax and not the overall income.

Cess is levied on all taxpayers of the country.

The Surcharge is levied on citizens who earn more than 50 lakhs per annum.

The Cess rate is 4%.

Surcharges can vary between 10%, 15%, 25%, and 37%.

Cess tax is collected to raise funds for a particular cause like education, health, infrastructure, etc.

The government spends the Surcharge as it deems fit according to its requirements.

Cess tax goes to the CFI, but its use is restricted.

The Surcharge also goes to the CFI, but its usage is not restricted.

Cess and Surcharge

Both Cess and Surcharge are important revenues collected by the Government of India. Finance minister Arun Jaitley introduced the Cess tax in the 2018 Union Budget. Those individuals in India who earn more than Rs. 1 crore annually must pay a 15% Surcharge, separate from their tax obligations.

What is Cess?

Cess can be simply understood as a tax on the tax imposed by the Union Government to collect revenue for specific reasons. In India, Cess applies to all the citizens of the country who are taxpayers.

  • It is calculated over and above the base tax charge of the taxpayer.
  • All the collected tax is initially directed to the consolidated funds of India, i.e., CFI.
  • Cess tax must be used for the purpose it has been collected.

The various types of Cess tax levied in India are -

  • Health Cess
  • Education Cess
  • Tobacco products
  • Road and Infrastructure Cess
  • Export duty Cess
  • Crude oil Cess
  • Swachh Bharat Abhiyan Cess
  • Krishi Kalyan Cess
  • Motor car infrastructure Cess
  • Clean Energy Cess

What is Surcharge?

The Surcharge is levied on the payable tax and not the overall income. Only those taxpayers who earn more than Rs 50 lakhs per annum must pay the Surcharge.

  • The Surcharge tax is not collected for any specific reasons.
  • The Union Government can use the Surcharge tax money any way it deems fit.
  • All the Surcharge collected initially goes to the consolidated funds of India, i.e., CFI.
  • Personal income tax and corporate income tax are two of the major Surcharges collected in India.

To conclude, the main difference between a cess and a surcharge is that Cess is a fixed tax and a surcharge is variable and levied upon a specific set of citizens, unlike a cess tax.

Important Topics
Difference Between Philosophy and PsychologyDifference Between Secularism and Communalism
Difference Between Sociology and EconomicsDifference Between Strategy and Tactics
Difference Between Sociology and HistoryDifference Between Physical Geography and Human Geography
Difference Between Sociology and PsychologyDifference Between Uttarayan and Dakshinayan

Comments

write a comment

FAQs on Difference Between Cess and Surcharge

  • The Difference Between Cess and Surcharge is that the Cess is calculated over and above the base tax charge of the taxpayer. It applies to all taxpayers. On the other hand, the Surcharge is levied on the payable tax and not the overall income of those citizens who earn more than 50 lakhs per annum

  • Cess and Surcharge are the interest on tax acted upon, by the taxpayer, under the Finance Act. The Cess is a fixed tax, whereas the Surcharge is a variable tax. But both do not apply to the same taxpayer. Cess on one hand is applied to each one whereas on the other hand surcharge applies to citizens earning more than 50 lakhs per annum.

  • The Union Government in India collects revenue from levying various taxes on its citizens. To understand this taxation system in detail, it is important to Know the Difference Between Cess and Surcharge

  • Swachh Bharat Cess was introduced for the first time in 2015. It was introduced with the Finance Act 2015. The mention of this Cess is in chapter VI. The 15th of November 2015 was the implementation date of SBC. It is done to finance the Swachh Bharat Abhiyan.

  • The Key Difference Between Cess and Surcharge is that the Cess tax is collected to raise funds for a particular cause like education, health, infrastructure, etc. However, the Surcharge is spent by the government as it deems fit according to its requirements

Featured Articles

Follow us for latest updates