Central Excise and Service Tax (CESS)

CESS Meaning

CESS stands for 'Central Excise and Service Tax.' It is a term used primarily in the context of taxation in India. Let's break down the meaning and components of CESS:

• Central Excise: Central Excise is a tax levied on the production or manufacture of goods in India. It is governed by the Central Excise Act, 1944. Central Excise duties are imposed on the value of goods at the time of their removal from the place of manufacture. The tax is borne by the manufacturer or producer, but it is usually passed on to the consumer through the pricing of the goods.
• Service Tax: Service Tax is a tax imposed on specific services provided in India. It was introduced in 1994 under the Finance Act, 1994. Service Tax is levied on a wide range of services, including professional services, banking services, insurance services, telecommunications, advertising, consulting, and many others. Service providers are responsible for collecting and remitting the tax to the government.
• CESS: CESS refers to an additional tax or levy imposed over and above the basic taxes like Central Excise and Service Tax. It is usually introduced for a specific purpose or to fund a particular initiative. CESS can be either a percentage-based tax on the value of goods or services, or it can be a fixed amount per unit. The revenue generated from CESS is earmarked for specific purposes such as education, healthcare, infrastructure development, environmental protection, or any other government initiatives.

CESS can be imposed by both the central government and state governments in India. The rates and types of CESS can vary depending on the objective and the sector it is intended to support. CESS may also be imposed as an additional duty or surcharge on certain goods or services.

It's important to note that the Goods and Services Tax (GST) regime was introduced in India in July 2017, replacing various indirect taxes including Central Excise and Service Tax. Under the GST system, CESS has been replaced by a new concept called 'compensation cess,' which is primarily used to compensate states for any revenue losses incurred due to the implementation of GST.

In summary, CESS refers to an additional tax or levy imposed over and above the basic taxes like Central Excise and Service Tax in India. It is introduced for specific purposes and can be imposed by both central and state governments. CESS can vary in rates and types depending on the objective and the sector it is intended to support.