Cess not getting transferred to dedicated funds: CAG

Funds collected by the Centre as cesses for specific purposes, such as the mineral trust, oil industry development and infrastructure, have not been fully transferred to dedicated funds, the Comptroller and Auditor General of India (CAG) said, while pointing out deficiencies in the collection, transfer and utilisation of these levies.

In the financial audit of the government accounts for the year 2018-19, tabled in Parliament on Wednesday, the government auditor said the issue of short-transfer of cess collected in the Consolidated Fund of India (CFI) for their dedicated accounts has been a recurring problem for many years.

There was short transfer of Rs 1,64,322 crore to various Reserve Funds/Boards from 35 cesses that were levied in 2018-19. Though the government collected Rs 2,74,592 crore from cesses that year, more than Rs 1,00,000 crore got transferred to the CFI rather than being used for the intended purposes, the CAG noted.

Under the scheme, such cesses and levies are required to be first transferred to designated Reserve Funds and utilised for the specific purposes intended by the Parliament.

In addition, the CAG noted that "Social Welfare Surcharge" on Customs amounting to Rs 8,871.19 crore was levied but no dedicated fund for the same was envisaged. "Non-creation/non-operation of Reserve Funds makes it difficult to ensure that cesses and levies have been utilised for the specific purposes intended by the Parliament," the CAG said in its report.

During FY19, the CAG audit also found that GST Compensation Cess of Rs 40,806 crore was short-credited to the related Reserve Fund. Also, Rs 10,157 crore of the Road and Infrastructure Cess collected during the year was neither transferred to the related Reserve Fund nor utilised for the purpose for which the cess was collected.

In addition, Rs 1,24,399 crore, representing the cess on crude oil, collected in the last decade, had not been transferred to the designated Reserve Fund (the Oil Industry Development Board) and was retained in the CFI.

Other short transfers to designated reserve funds included Rs 2,123 crore in the case of the Universal Service Levy and Rs 79 crore in the case of the National Mineral Trust Levy, the CAG said.