Govt may introduce “coronavirus cess”

The government is likely to introduce a "coronavirus cess" or surcharge on individual taxpayers in the upcoming budget. A Covid cess may be levied on the higher income groups, said, experts. Finance Minister Nirmala Sitharaman will present the Union Budget on 1 February 2021.

The Covid-19 pandemic has severely disrupted economies across the globe in unprecedented ways. To provide relief to the pandemic-battered sector, the government announced an Atmanirbhar Bharat stimulus package. Tax filing deadlines were extended, and several other measures were adopted to protect the economy. The centre also introduced the Leave Travel Concession (LTC) cash voucher scheme to boost spending. To boost growth and the economy ahead, the centre is likely to bring some policies to raise revenues.

The year 2020 has been a challenging one for the government and taxpayers alike. The government has been struggling with poor revenue collections. On the other hand, there is increased pressure to make investments in infrastructure projects to generate jobs and push the economy ahead, said Archit Gupta, Founder and chief executive officer, ClearTax.

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The centre had started the first phase of a nationwide Covid-19 vaccine drive this month. The government will bear the entire cost of the immunisation drive. Gupta said that it would be unfair to expect any tax reliefs with this backdrop. The government may choose to bring in a covid cess or some other similar cess of between 2-4%, said Gupta.

This cess may be made applicable to higher-income ranges to cover for the money spent on meals and other assistance to the poorest during coronavirus as well as the costs involved to vaccinate everyone in 2021 and further. Businesses may likely face this cess if not individuals, claimed Gupta.

A cess is a form of tax levied by the government on tax with specific purposes until the government gets enough money for that purpose. A cess is imposed as an additional tax besides the existing tax.

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