FM Sitharaman: Cess and Surcharge Funds Utilised to Benefit States

New Delhi, Feb 12 : Finance Minister Nirmala Sitharaman on Wednesday defended the collection and utilisation of cesses and surcharges, stating that the funds are spent on schemes that benefit states and are fully in line with constitutional provisions. She was responding to criticism by some states during discussions on the Budget in the Lok Sabha.

Addressing concerns over revenue sharing, Sitharaman said states should differentiate between gross tax revenue and the legally shareable net proceeds. “States can’t have it both ways. The net proceeds forming the divisible pool, after removing cess and surcharge from gross tax revenue, are fully transferred,” she said.

The minister highlighted that the Centre transfers 41% of revenue to states, following the 16th Finance Commission’s recommendations. “The Finance Commission analysed state share transfers from 2018-19 to 2022-23 and confirmed that devolution matched its recommendations. There is no scope for doubt,” she added.

Sitharaman also criticised states such as West Bengal, accusing them of levying additional taxes on citizens while blaming the Centre for GST collections. “If there is concern about GST burdening citizens, why impose extra state-level taxes such as road levies or vehicle registration fees?” she asked, targeting claims made by Abhishek Banerjee.

Rebutting opposition concerns, the Finance Minister highlighted government incentives for data centres, reforms in SEZs, customs improvements, and support for MSMEs, countering allegations about Indian data policies and the Budget’s handling of geopolitics, energy, and financial security.