PAC Flags Failure To Transfer ₹9,222 Cr. In Cess Collections, Pg12

Key Highlights:

• The Public Accounts Committee (PAC) expressed concern over the failure to transfer ₹9,222 crore in cess and levy collections to designated reserve funds during the financial year 2024-25.
• This observation is based on Paragraph 3.3.1 of the Comptroller and Auditor General's (CAG's) Report No. 6 of 2026.
• The PAC chairperson noted that the committee had previously flagged this issue in its 69th report, tabled in August 2023.
• The committee emphasized that cess collections must be utilized solely for their intended purposes and not to finance the government's budgetary deficit.

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Detailed Insights:

• Cess and levies are specific taxes collected by the Union government for earmarked purposes, unlike general tax revenues.
• These collections are meant to be deposited into designated reserve funds, which are typically part of the Public Account of India, separate from the Consolidated Fund of India.
• The CAG plays a crucial role as an independent constitutional authority (Article 148) by auditing government receipts and expenditures to ensure financial accountability.
• The PAC acts as a parliamentary watchdog, scrutinizing CAG reports to verify that public funds are spent legally, efficiently, and for their authorized objectives.
• Non-transfer of cess collections to their designated funds can lead to an understatement of the revenue or fiscal deficit.
• Since cess collections are not part of the divisible pool of taxes, they are not shared with state governments, making their proper utilization by the Centre critical.
• The PAC had previously recommended scientific assessments of cess amounts, periodic reviews of their objectives, and regular crediting of proceeds to reserve funds.

Key Concepts Involved:

• Public Accounts Committee (PAC): A parliamentary committee that examines government expenditure and CAG reports to ensure financial accountability and proper utilization of public funds.
• Comptroller and Auditor General (CAG): A constitutional authority (Article 148) responsible for auditing all receipts and expenditures of the Union and State governments, submitting reports to Parliament.
• Cess: A tax levied by the government for a specific purpose, imposed over and above existing taxes, with its proceeds earmarked exclusively for that particular objective.
• Reserve Funds: Funds established for specific purposes, often under statutory provisions or executive orders, and financed by earmarked collections like cess and levies.
• Consolidated Fund of India: The primary government account where all revenues received, loans raised, and recoveries of loans by the Union government are deposited.