What happened to Education Cess?
THE Government had been collecting Education Cess on Customs, Excise, Service Tax and Income Tax since 2004. What did the Government do with all the money collected?
The CAG, in a recent report, observed,
A non-lapsable fund for elementary education known as Prarambhik Shiksha Kosh (PSK) was created in 2005-06 under non-interest bearing section of the reserve funds in the Public Account. This fund is meant to meet the expenditure requirement for elementary education under the schemes of Sarva Shiksha Abhiyaan and Mid-Day Meal Scheme. Through the Finance Act (No. 2) of 2004 a primary education cess of 2 per cent was levied on all central taxes. The cess collection is initially credited to the CFI and subsequently transferred after obtaining the Parliamentary authorisation to the PSK to finance the expenditure on elementary education.
Chief Controller of Accounts (CCA), Ministry of Human Resource Development is responsible for maintaining the accounts of the PSK in coordination with the CCA, Central Board of Direct Taxes and Central Board of Excise and Customs in the Department of Revenue.
Scrutiny of Union Finance Accounts for the period 2004-05 to 2014-15 showed that against the total collection of Rs. 1,54,818 crore of primary education cess in the CFI, only Rs. 1,41,520 crore was transferred to the PSK, resulting in short transfer of Rs. 13,298 crore. During the period 2004-15, in some years the transfer was more than the cess collected, while in some years it was less than the cess collected. Thus, there is no reconciliation between the CCA of the Ministry of Human Resource Development and the CCA, Central Board of Direct Taxes/Central Board of Excise and Customs in the Department of Revenue.
Secondary and Higher Education Cess: The Secondary and Higher Education Cess (SHEC) was introduced in the Finance Act, 2007 to fulfil the commitment of secondary and higher education.
Scrutiny of the Union Finance Accounts for the period 2006-15 showed that a total collection of SHEC of Rs. 64,228 crore had been made. However, unlike the creation of PSK in the case of primary/elementary education cess, neither a fund was designated to deposit the proceeds of SHEC thereto nor schemes identified on which the cess proceeds were to be spent. Consequently, the commitment of furthering secondary and higher education as envisaged in the Finance Act was not transparently ascertainable from the Union Accounts. Thus, the possibility of the diversion of funds for purposes not mandated under the Finance Act cannot be ruled out.