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Derek O’Brien Denounces Rising Cess as Threat to Federalism After GST Rate Overhaul

He says cess routed entirely to the Centre is shrinking the tax pool shared with states.

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Trinamool Congress MP Derek O'Brien (photo:IANS)

Overview

  • The TMC leader said cess is "slitting the throat of federalism," arguing that these levies are not shared with states.
  • He cited figures that cess formed 7% of Union tax revenue in 2012 and is estimated at about 20% in 2025.
  • He claimed Rs 5.7 lakh crore of cess and surcharge has remained unutilised since 2019.
  • Quoting RBI data, he said the divisible pool fell from 89% of gross tax revenue in 2011 to 79% in 2021.
  • The GST Council approved a two-tier structure of 5% and 18% to take effect on 22 September, as states press for a compensation mechanism and some seek a higher devolution share of 50% against the current 41%, with the Revenue Secretary estimating a Rs 48,000 crore loss and O’Brien asserting it could exceed Rs 1 lakh crore.