Education cess of 3% – Where is it being utilized?

I am one of those left wondering what’s happening to the 3% surcharge (called “Education cess”) on my income tax.

To give some background on how this Education cess originated:

To give a boost to primary education in the country and in conformity with the Common Minimum Programme of the UPA government, former Finance Minister P Chidambaram on July 2004 proposed to levy a Educationcess of two per cent on income tax, corporation tax, excise and customs duties and service tax. The new cess was expected to yield about Rs 4,000-5,000 crore (Rs 40-50 billion) per annum and the entire amount will be earmarked for education including provision of nutritious cooked mid-day meal. The education cess will be a 2 per cent surcharge on the total payable tax, and not 2 per cent of total income.

An additional 1% Secondary and Higher Education cess was imposed in 2007 to help fund new seats in higher education that are required to implement the 27% reservation of seats for other backward classes. “It has been introduced to fund secondary and higher education as well as for the expansion of capacity by 54% for reservation for socially and educationally backward classes.”
The increase in cess will fund secondary and higher education, particularly the shortfall in the recommendations of the Moily Committee report. The committee said this implies a 54% rise in student admissions at an estimated expenditure of Rs16,563 crore spread over five years.

I’ve borrowed some of the text above from an informative article on the net – here is the link:
It’s really worth a read. This is really the best source I could find – as you can imagine, information on this is not so easy to gather and it exists in spurts here and there – but there is no comprehensive source and the Government web sites aren’t that helpful either.

It’s a worrying factor that we do not have transparency from the Government on what’s happening to this money – a bigger cause for concern is that budgetary allocations for education are actually reducing every year, though the kitty collected under the education cess is increasing.

(I’ve always been a bit skeptical about levying taxes through the back door and not directing them towards the intended destination – just to give an example, the Indian Railways collects a “safety surcharge” on your ticket price – do we have any solid proof to say that the Railways have utilized this security surcharge effectively and that this will result in a safer journey? Do we have data to prove that the number of train accidents have been reduced after levying this surcharge?)

Education is one thing for which I do not mind paying an additional amount in the form of tax from my pocket – however, I really would want to know what’s happening to the money and I think we all have a right to know as well – invoke the Right to Information Act!


2 thoughts on “Education cess of 3% – Where is it being utilized?

  1. arvakshane says:

    You can figure out that education cess is mant for funding education in the country….what I am not clear about is why does McDonalds levy it on my food bill?

    I order anything and I have to pay an extra 4-5 bucks as education cess…so am I paying the education cess on McDonald’s behalf in addition to what I pay as part of my income tax or is there someething else added to the law that states for every proprietary food I eat I have to pay education cess?

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