Agriculture Cess Won't Burden Consumers, Clarifies Nirmala Sitharaman

The new cess will either reduce prices, or keep them unchanged at the least, the FM clarified in her post-Budget presser

Finance Minister Nirmala Sitharaman clarified in her post-Budget press conference that the newly levied Agriculture Infrastructure and Development Cess will not be borne by the end user on even a single item on which it is imposed.

At the press conference, a journalist asked Sitharaman the rationale behind the cess, to which she replied that they reduced the custom duties [for alcohol, as asked by the journalist] and imposed a disproportionately low cess.

This, the finance minister claimed would translate to a lower or to a retained cost for the consumer.

"For example, 10% was bought down in customs, we have only added 5%-6% of cess", she illustrated. She further added (in Hindi), "It's a restructure; whatever we used to earn from excise and customs, we carved out the Agricultural Infrastructure and Development Cess from there".

Sitharaman also said in her opening remarks before taking questions, "In no category has he [the consumer] ended up paying more after the Agriculture Infrastructure and Development Cess".

Further, she cited the government's focus on agriculture as the reason behind this move. The government wanted to be sure that in order to improve agricultural infrastructure, a dedicated amount is coming into the budget towards that. A cess may be levied directly or indirectly and is used by governments to raise funds for a specific purpose.

She said that it is simply a restructuring that they have done on basic customs duty and excise, and that it would not be levied on the final consumer. Rather, they could end up paying less or paying nothing more at all on these items.

Also Read: Union Budget 2021: Top 10 Takeaways For Atmanirbhar Bharat Budget

On what items has the cess been levied?

The annexure to the finance minister's Budget speech has shared details on which products this will be added to. Find this annexure as a part of her speech here.

On the customs side, a proposed cess is mentioned in the image below below. The cess, on alcohol, for example, is 100%, while that on lignite, coal and peat is 1.5%. While the government may have imposed a cess, they have also provided a new schedule of customs on these items to counteract the cess.

There is also an excise side imposition on fuel - ₹2.5 per litre on petrol and ₹4 per litre on diesel. Again, the annexure states that this cess would not trickle down to the consumer.


The customs side imposition of the cess


Her statement can be seen below.


Updated On: 2021-02-01T18:28:14+05:30
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