difference between tax, cess and duty.

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vijay

vijay (Querist)
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15 February 2017 can anyone please tell me the difference between tax vs cess vs duty.

Sathish M

Sathish M (Expert)
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15 February 2017 Tax - Any money the government takes from you (legally) for doing any economic activity is referred to as tax. Generally, this is a percentage of the money you receive or give. Taxes can be either direct, where the money goes directly from your pocket to the govt's kitty like income tax, or indirect, where the money goes from your pocket to someone else's pocket and then to the govt's pocket like customs or excise.

Duty - In economics, a duty is a kind of tax levied by a state. It is often associated with customs, in which context they are also known as tariffs or dues. The term is often used to describe a tax on certain items purchased abroad. This is an on-border tax charged on goods (commodities, or things that you can physically touch) either while coming into the country or going out of the country. Generally, a percentage of the value of the good.

Cess - This is a tax on tax, levied by the govt for a specific purpose. Generally, cess is expected to be levied till the time the govt gets enough money for that purpose. The education cess, that is levied currently, is meant to finance basic education in the country.
The term cess is confusing because it means different things to different people, depending on where a person lives. In Ireland, Cess is nothing but a tax, while in Scotland it means a property tax. In Thailand, the term is used to refer to Rubber Export Tax. However in modern India, cess refers to a tax that is levied for a particular reason to collect money to fund particular project for the betterment of the country. For example, education cess is collected in order to provide education in rural countries.