Budget

India Collected ₹3.73 Lakh Crore in Cesses in FY 2024-25. Did the Money Reach Its Purpose?

Published 21 Oct 2026· By Finoscape Editorial Team· 11 min read

Edited by CA Siddharth S. Sancheti | LinkedIn: linkedin.com/in/casancheti | S S Sancheti & Associates, Chartered Accountants, Mumbai

In brief: The Comptroller and Auditor General (CAG) reports that the Union Government collected ₹3,72,982 crore in cesses in FY 2024-25. A cess is a tax raised for a named purpose such as health, education or roads. The CAG’s audit asks a different question from “how much was collected”. It asks whether the money reached the fund meant to receive it. For health cess alone, an analysis of CAG data reports ₹50,072 crore not transferred to the designated fund over seven years. This explainer walks through the numbers with charts and keeps the facts and the opinions apart.

Let’s start with your payslip

Open your last income tax computation. Below the tax line you will find one more line called “Health and Education Cess”. It is 4% of your income tax plus surcharge.

Take a taxpayer whose income tax plus surcharge is ₹5,00,000. The cess is ₹20,000 and the total payable becomes ₹5,20,000. Most of us pay that line without a second look.

Multiply that habit by crores of taxpayers and add the cesses on fuel, on goods and on imports. You get a very large number. The CAG has now put that number on record for FY 2024-25. The harder question is what happened to the money after it left our pockets.

The big number

Measure	FY 2024-25	Source
Total cess collections	₹3,72,982 crore	CAG Report No. 6 of 2026
Cess and surcharge together	₹5,29,357 crore	CAG Report No. 6 of 2026
Combined cess and surcharge as a share of gross tax revenue	13.94%	CAG Report No. 6 of 2026
Growth in cess and surcharge over FY 2023-24	8.40%	CAG Report No. 6 of 2026

A note on the numbers. Different totals circulate in commentary and on social media. We use the CAG’s own figures. The total above is the sum of the category table below. We checked that the categories add up to it.

1. Where did the cess come from?

Cess category	FY 2024-25 collection	Share of total
GST Compensation Cess	₹1,50,570 crore	40.4%
Health and Education Cess	₹84,339 crore	22.6%
Agriculture Infrastructure and Development Cess	₹75,455 crore	20.2%
Road and Infrastructure Cess	₹44,680 crore	12.0%
Cess on crude oil	₹17,931 crore	4.8%
Others	₹7 crore	Nil
Total	₹3,72,982 crore	100%

Shares are computed by Finoscape from the CAG table. Three cesses make up more than 83% of the total.

2. Why a cess is different from an ordinary tax

Think of ordinary tax as money that goes into one big family kitty. A cess is money collected in an envelope marked “for this purpose only”.

There is a second difference that matters for the States. Under Article 270 of the Constitution, taxes are shared between the Union and the States through the Finance Commission formula. Surcharges and cesses levied for specific purposes sit outside that shared pool. So when the Centre leans more on cess and surcharge, the States get no share of that part.

The CAG data shows that the combined share of cess and surcharge has come down from 20.23% in FY 2020-21 to 13.94% in FY 2024-25. It is still a very large pool of revenue that is not shared with the States.

3. The three stages of a cess

Here is the idea that unlocks the whole debate. A cess has a life in three stages.

Stage	What happens	The audit question
1. Collection	The government receives the levy	How much was collected?
2. Transfer	The required amount is credited to the designated reserve fund	How much was legally due and how much was credited?
3. Utilisation	The fund pays for the programme	What was spent and what did it achieve?

A collection figure speaks only about Stage 1. The CAG’s findings sit mostly at Stage 2. Please keep this in mind through the rest of the article.

4. Health cess: the biggest gap

Health is where the numbers are starkest.

Jan Swasthya Abhiyan India analysed CAG data and reported that the Centre collected ₹96,627 crore as health cess between FY 2018-19 and FY 2024-25. Of this, ₹46,554 crore was transferred to the public account. That leaves ₹50,072 crore not transferred to the designated fund, about 52% of collections.

The CAG report records the position for FY 2024-25 alone. Of ₹21,085 crore collected as the health portion of the cess, ₹14,439 crore went to the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN). The shortfall was ₹6,646 crore. That is 31.5% of the year’s health cess collections.

Health cess	Amount (₹ crore)
Collected, FY 2018-19 to FY 2024-25	96,627
Transferred to public account	46,554
Not transferred	50,072
Collected, FY 2024-25	21,085
Transferred to PMSSN, FY 2024-25	14,439
Not transferred, FY 2024-25	6,646

The seven-year figures are the organisation’s analysis. The ₹1 crore difference between the three seven-year numbers reflects rounding in the reported amounts.

The CAG report also records that ₹9,222 crore of cess and levy collections in FY 2024-25 was short-transferred to four designated reserve funds in all. These include the Prarambhik Shiksha Kosh and the PMSSN.

What PMSSN is for. The Union Cabinet approved PMSSN as a non-lapsable reserve fund for the health share of the Health and Education Cess. It is meant to finance flagship programmes such as Ayushman Bharat PM-JAY, health and wellness centres and the National Health Mission.

What “not transferred” does and does not mean. It does not mean the money was stolen. It does not mean it was spent elsewhere. It means the amount stayed in the Consolidated Fund of India instead of moving to the fund meant to receive it. That is why the reported shortfall matters for the ring-fence a cess promises. The Health Ministry has said the Finance Ministry is responsible for collecting the cess and transferring the funds. The CAG has said it received no satisfactory response on the short transfers.

5. Education cess: money waiting in the system

The education story is a slightly different chapter. The money was collected. It reached the fund late.

A Careers360 report based on two CAG reports and budget documents looks at the Madhyamik and Uchchatar Shiksha Kosh (MUSK), the fund for secondary and higher education. For the first four years the fund received nothing.

Financial year	Amount collected (₹ crore)	Transferred to MUSK (₹ crore)
2018-19	10,327.50	Nil
2019-20	9,810.25	Nil
2020-21	8,973.75	Nil
2021-22	13,187.50	Nil
2022-23	15,453.50	14,250.00
2023-24	17,789.75	37,833.33
Total	75,542.25	52,083.33

The gap between the two totals is ₹23,459 crore (75,542.25 less 52,083.33). The report says this amount was still lying in the Consolidated Fund. The transfer in FY 2023-24 is larger than that year’s collection because the fund received catch-up amounts for earlier years. A separate fund, the Prarambhik Shiksha Kosh, serves primary education and should not be confused with MUSK.

Why this matters. Allocation, transfer and spending are three different things. A fund can receive money and still leave it unspent. A ministry can have a budget and still not spend it. A full audit has to reconcile all three.

6. Road cess: a purpose that grew

The Road and Infrastructure Cess finances the Central Road and Infrastructure Fund (CRIF). PRS Legislative Research reports that ₹44,675 crore was collected in FY 2024-25. The CAG table shows ₹44,680 crore. The small difference is a matter of source and rounding.

PRS notes that the amount is released to the National Highways Authority of India and to State and UT governments for infrastructure sectors such as transport, energy, water and sanitation. So the cess named for roads now funds a wider range of infrastructure. That is a legitimate legal evolution. It also means the label no longer tells the whole story.

Toll is not cess

Toll is a user fee paid by the vehicle owner. Cess is a tax levy. They are different in law and in accounting. We include toll data here only because both pay for the same kind of asset.

Year	Toll (user fee) collections (₹ crore)
FY22	33,929
FY23	48,032
FY24	55,882
FY25	61,408
FY26	70,278

Collections rose about 107% between FY22 and FY26. Rising toll receipts reflect more highway length, more traffic, FASTag adoption and toll policy. They do not prove that road cess is being used efficiently. For that you need project completion, maintenance quality and cost data.

7. GST Compensation Cess: an older lesson

GST Compensation Cess is the largest cess in the CAG table. It was meant to compensate States for revenue loss in the early GST years under the GST (Compensation to States) Act 2017.

The CAG’s earlier audit found that ₹47,272 crore of the cess was short-credited to the designated fund in its first two years. That is ₹6,466 crore in FY 2017-18 and ₹40,806 crore in FY 2018-19 (the two add up exactly). The CAG said the amount stayed in the Consolidated Fund and became available for other uses. The Finance Ministry accepted the audit observation and said in February 2020 that the proceeds not transferred would be transferred in the subsequent year.

The lesson is a careful one. A short transfer is an accounting finding that needs reconciling. It is not on its own proof of fraud or of permanent loss. The right questions are whether the transfer was legally required, when it was made and whether the fund finally received the correct credit.

8. What a good cess audit should ask

Question	Why it matters
How much was collected?	Sets the revenue base
How much was legally due to the fund?	Shows the obligation under the law
How much was transferred and when?	Tests completeness and timeliness
How much remained unspent in the fund?	Points to delays in implementation
What was the money spent on?	Tests consistency with the cess purpose
What outcomes followed?	Links money to hospitals, schools and roads

Three different failures hide behind a simple headline. Money that was never transferred. Money that was transferred but not spent. Money that was spent on an eligible programme with weak results. Each needs a different remedy.

What it means for you

If you are a taxpayer. Your 4% cess is real money. It is worth knowing which fund it is meant to reach.

If you are a professional or business owner. Cess lines appear in your tax computation and in your GST and customs work. Understanding the purpose behind each levy helps you explain the line to clients.

If you follow public finance. The next time you see “₹X lakh crore collected”, ask the three stage questions. Collected. Transferred. Spent.

Our takeaway

Cesses can be a sound way to fund a clear priority. A label such as “health” or “education” is a promise. It is not proof that the money arrived. The CAG’s work puts the accounting trail at the centre of the debate.

The first priority is fund-by-fund reconciliation. Amount collected. Amount legally due. Amount transferred. Balance in the fund. Expenditure. Without that trail, citizens cannot judge whether earmarked taxation delivers what it promised.

Your turn. If one cess were audited first, which would you choose? Health, education or roads? Tell us on LinkedIn.

Your questions answered

Is “not transferred” the same as misused?
No. It means the money stayed in the Consolidated Fund and did not move to the designated fund. Whether it was later used for other purposes is a separate question that needs its own evidence.

Why do cesses matter to the States?
Cesses for specific purposes sit outside the pool shared with the States under Article 270. A larger cess share means a smaller shared pool.

About the editor

CA Siddharth S. Sancheti is a Chartered Accountant (ICAI Membership No. 138179) and sole proprietor of S S Sancheti & Associates, Chartered Accountants, Mumbai. His practice covers direct tax, GST, FEMA, company law, audit and virtual CFO services. He is the editor of Finoscape.

Connect on LinkedIn: linkedin.com/in/casancheti
Firm website: sanchetiassociates.in

Sources

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This article is for general information and is not advice on specific facts. Figures are attributed to the cited reports. Please read the CAG report itself before relying on any single number.

Finoscape | Editor: CA Siddharth S. Sancheti