Hyderabad: The Union Budget 2021-22 that was presented by Finance Minister Nirmala Sitharaman in the Parliament on February 1, introduced Agriculture Infrastructure and Development cess (AIDC).
The goal of the Cess is to develop agriculture infrastructure, especially Agricultural Produce Market Committees (APMC), across the country.
Here’s a quick look at the basics of this Cess.
What are Agriculture Infrastructure and Development cess?
To begin with, a cess is a special kind of tax that is meant to fund a specific purpose. In this case, revenues mobilised through AIDC will be dedicated to the agriculture infrastructure.
The Constitution of India authorises the central government to impose such levies.
The proposed AIDC or Agri cess will be levied on 29 items such as petrol, diesel, gold and silver bars, alcoholic beverages, apples, crude palm oil, etc.
For instance, AIDC to the tune of Rs 2.5 and Rs 4 was imposed on a litre of petrol and diesel respectively.
Similarly, other items attracted Agri cess ranging from 2.5 per cent to 100 per cent.
What would be the impact on end consumers?
During the Budget speech, the Finance Minister assured that the load of Agri cess will not be passed on to the consumers.
She explained that though the Centre has implemented Agri cess on select items and it has also readjusted excise duty on them to keep their prices unchanged.
For instance, unbranded petrol which earlier attracted a basic excise duty (BED) of Rs 2.98 per litre has now been reduced to Rs 1.4 and a special additional excise duty (SAED) of Rs 12 per litre has been reduced to Rs 11 per litre so that the end consumer will pay the same amount that one used to pay before the cess imposition.
Similarly, the customs duty for alcoholic beverages, which earlier attracted 150 per cent, has been slashed to 50 per cent and instead 100 per cent AIDC has been imposed on it.
What would be the impact on States?
While some experts welcome the AIDC saying it will help in creating agriculture infrastructure in underserved parts of the country, some argue that it will hurt states coffers as it converts a tax component into a cess component.
Citing the provisions of the constitution, they argue that while the revenue collected through excise duty is distributed between the Centre and States, whereas, the proceeds from Cess belongs to the Centre alone.
