Agriculture Infrastructure and Development Cess (AIDC)

About Agriculture Infrastructure and Development Cess (AIDC):

• It was introduced in the Union Budget 2021-22.
• It is a tax that the government imposes on the commercial production of agricultural produce. 
• The cess is imposed at a specific rate on the value of these goods.
• Purpose:
  • The primary objective of AIDC is to provide financial support for the development of agricultural infrastructure in India. 
  • The funds collected through this cess will be utilized for the creation and maintenance of agricultural infrastructure such as cold storage facilities, warehouses, and market yards. 
  • It aims to enhance the overall efficiency of the agricultural sector and improve farmers' income.
• Collection: The AIDC is collected by the government at the point of sale or import of the applicable goods. 

What is a Cess?

• Cess is a form of tax charged/levied over and above the base tax liability of a taxpayer.
• A cess is usually imposed additionally when the state or the central government looks to raise funds for specific purposes. 
• For example, the government levies an education cess to generate additional revenue for funding primary, secondary, and higher education.
• Cess is not a permanent source of revenue for the government, and it is discontinued when the purpose of levying it is fulfilled.
• It can be levied on both indirect and direct taxes.
• What is the difference between tax and cess?
  • Cess is different from taxes such as income tax, GST, and excise duty, etc., as it is charged over and above the existing taxes.
  • While all taxes go to the Consolidated Fund of India (CFI), cess may initially go to the CFI but has to be used for the purpose for which it was collected. 
  • If the cess collected in a particular year goes unspent, it cannot be allocated for other purposes. 
  • The amount gets carried over to the next year and can only be used for the cause it was meant for. 
  • The central government does not need to share the cess with the state government either partially or in full, unlike some other taxes.

Q1) What is a Surcharge?

The term surcharge refers to an additional charge, fee, or tax that is added to the cost of a good or service beyond the initially quoted price. A surcharge is often added to an existing tax and is not included in the stated price of the good or service. The amount of a surcharge varies and can be a fixed amount or a percentage of This charge may be imposed because of a governing body's need for additional revenue or to defray the cost of increased commodity pricing.

Source: Government Exempts LPG Imports From Agriculture Cess