[Economy Q] Difference between Tax and Cess

[Economy Q] Difference between Tax and Cess

explain the difference between 'Tax' & 'Cess'

Tax is self-explanatory, you've to pay a portion of money to the Government on the income /profit you make or the products you purchase etc.

Cess means Tax on that tax.

 For example if there is 10% income Tax and 3% Educational-Cess on it.
Your income is 1 lakh Rupees, so you have to pay 10% income tax on it =Rs. 10000.
And Cess = tax on the tax. So 3% cess on Rs.10000 income Tax = Rs.300

Generally Cess is temporary in nature. e.g. Education cess on income tax is taken, and after Government get sufficient money to open new schools, then cess is removed.

Food for thought

 The tax itself is taken in pretext of running the administration and doing the Development work so If Cess (tax on tax) is demanded that means something is not right in the system.