Cess and surcharge money spent to benefit states: FM Sitharaman

NEW DELHI: Finance minister Nirmala Sitharaman on Wednesday rejected the criticism by states over cesses and surcharges, arguing that it was in line with the Constitutional provisions and the money collected through these levies was spent on schemes that benefited the states.

While responding to the discussion on the Budget in the Lok Sabha, FM said that states should distinguish between the gross tax revenue and the net proceeds that are legally shareable. “States can’t have it both ways. The states should check if the entire net proceeds which form the divisible pool, after removing cess and surcharge from gross tax revenue, is received by them,” she said.

The minister said that the Centre was transferring 41% to the states, as was recommended by the Finance Commission. “The 16th Finance Commission analysed the state’s share transferred by the Centre to the states from 2018-19 to 2022-23, and concluded that in each of these years, the devolution made by the Centre exactly matches the recommendation of the Finance Commission. So, we are not the only ones claiming this… There is no scope for any doubt in this for the states,” the minister said.

Sitharaman also criticised states such as West Bengal, where Mamata Banerjee’s TMC was in power, arguing that they blamed the Centre for GST, but then imposed additional burden on consumers. “The state govt in West Bengal imposes road levies and charges taxes at the time of new vehicle registration. If there is so much concern about GST burdening citizens, then why impose additional state-level taxes? These could be waived for the people of Bengal, but instead, GST collections are criticised while state taxes continue to be levied,” she said while accusing Abhishek Banerjee of twisting facts on GST.

She said govt is incentivising data centres in the country, in what was a rebuttal to Rahul Gandhi’s claims on Indian data. Further, she listed out measures on SEZs, customs reforms and support to MSMEs to counter Rahul’s concerns. “Leader of the Opposition expressed concerns over geopolitics, energy and weaponisation of finance. He said that the Budget acknowledges these challenges, but he didn’t read the Budget and the steps announced in it to address these challenges.”