HRD Ministry does not know the quantum of Education Cess HRD Ministry does not know the quantum of Education Cess collected

Education Cess is levied and collected since May 2007 by the Central Government in the Ministry at the rate of 1 per cent calculated on the aggregate of all direct and indirect taxes.  The said levy is for the promotion of secondary and higher education in India and is part of the proposals of the Budget for 2007-08.

The levy is in vogue for now more than two years.  The annual collection of these taxes is approximately Rs.5 lakh crore and one per cent of this for the last two years would work out more than Rs.10,000 crore.

On enquiry, the Department of Higher Education in the Ministry of HRD, Government of India, has replied that the amount collected at the rate of one per cent as stated above for secondary and higher education is not available with them and that only the Ministry of Finance knows about it.  ' There is no separate kosh for collecting the funds raised for this additional cess of 1% for Secondary & Higher Education.  Only Gross Budgetary Support is provided to the Department of Higher Education to meet its budgetary requirement and no separate allocation is made from the funds generated from 1% cess for Secondary and Education,'  Mr. G.S. Bothyal, Director in the Department of Higher Education, has further informed.

The collecting agency is the Ministry of Finance, no doubt, but the amount collected from the public for the sake of education may have to be separately quantified and the details thereof shared with the Ministry concerned with the welfare measure.  Needless to say, the responsibility for issuing a periodical public statement about the success of the scheme of providing for the cause of education by additionally taxing the public requires to be accepted by the Ministries concerned. 

Yet another relevant issue in this context is whether the Ministry of Finance is duty bound to part with the full amount of Education Cess so collected to the Ministry of HRD.  The law enacted does not make it obligatory for the Finance Ministry to do so.  Section 136(2) of the Finance Act 2007 reads as follows:

' The Central Government may, after due appropriation made  by Parliament by law in this behalf, utilize, such sums of money of the Secondary and Higher Education Cess levied under sub-section (12) of section 2 and this chapter for the purposes specified in sub-section (1) as it may consider necessary.' 

It is important to note  that the word used is ' may'  and not ' shall' .  Is it the case that the Ministry of Finance is collecting a huge amount as Education Cess giving the impression to the public that they are coughing up extra tax for the cause of education in the country and then the Government utilizing a part of it for something else?

It is also relevant that a levy at the rate of 2 per cent of the taxes collected is being made in India since 2004 in the name of ' education' .  The amount accrued to the Union Government by these additional sources of income is substantial.  Has our education system instantaneously benefited from the Education Cess schemes?  This matter requires further study, as the Comptroller & Auditor General of India has not made any public statement about the nexus between the collection and the intended spending.

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