Budget 2021: Covid-19 Cess On High-Income Earners?

The discussion on levying a new coronavirus cess or surcharge revolves around a small cess on taxpayers who fall under the high-income bracket and some indirect taxes, according to a report.

Ghaziabad: A volunteer takes part in the dry run of the COVID-19 vaccine at ESIC Hospital, in Ghaziabad, Monday, Jan. 11, 2021. (PTI Photo)

Budget 2021: In order to cope with the financial impact of the pandemic and the additional expenses incurred, it is said that the government is planning to impose a Covid-19 cess. The discussion regarding the same is underway and a final decision on whether the tax will be in the form of a cess or surcharge will be taken closer to the Budget announcement, according to a newspaper report. "The proposal for a cess has been discussed," as per the sources quoted in the report by the Economic Times. The preliminary talks revolved around a small cess on taxpayers who fall under the high-income bracket and some indirect taxes, the report said.

What's being discussed?

There are discussions on whether to impose a new levy in the form of a coronavirus cess or surcharge.  The business daily in its report said the Centre may also add a cess to excise on petroleum and diesel or on top of customs duties. The talks are being held as part of the revenue raising measures, but the final decision will be taken closer to the budget which is scheduled for February 1.

Even as the Centre is likely to bear the cost of vaccination, other things related to distribution, manpower training and logistics are being handled by the states. By implementing the Covid-19 cess, the government will be in a position to quickly generate funds as opposed to raising taxes. Moreover, the government can keep the collection with it and not share with states as central cess collections belong to the Centre.

According to the initial estimates, the coronavirus vaccine rollout may cost the government between Rs 60,000 and Rs 65,000 crore. The government last week indicated it will launch the nationwide Covid-19 inoculation drive on January 16 and priority will be given to nearly three crore healthcare and frontline workers.

The decision, the government said, was taken at a high-level meeting where Prime Minister Narendra Modi reviewed the Covid-19 situation and vaccination drive preparedness across states and Union Territories. India had recently granted emergency use authorisation to two vaccines, Oxford's Covishield being manufactured by Serum Institute in India and Bharat Biotech's Covaxin. Both vaccines, the statement from the Health Ministry said, have established safety and immunogenicity.