Centre held back Rs 9,222 crore in cess collected from citizens meant for health, education: PAC

The cess and levies collected by the Union Finance Ministry from individuals and taxpayers across the country, amounting to Rs 9,222 crore in the 2024-25 fiscal year, had not been transferred to the designated funds for school education, health services, investor protection and oil industry development, with the Public Accounts Committee (PAC) of Parliament finding the Union Finance Ministry’s explanation for the huge shortfall in transfers unsatisfactory.

The latest observation was made by Congress leader K.C. Venugopal, who heads the PAC, based on the Comptroller and Auditor General (CAG) audit, while last year had also seen a similar failure on the Finance Ministry’s part, when the CAG termed the Ministry’s explanations unsatisfactory and asked it to reconcile what it claimed to have transferred to three of the four funds with the findings of the audit, The Hindu reported.

Despite collecting the cess, which is meant to be shared with State governments, the Finance Ministry is found to have withheld the funds, with the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN), run by the Ministry of Health and Family Welfare, recording the greatest shortfall in 2024-25 after receiving only Rs 6,646 crore against Rs 21,085 crore collected, marking a shortfall of Rs 14,439 crore.

Of the 4 per cent cess levied by the Government on income tax for health and education, alongside customs duties on imported medical devices to fund the PMSSN, 1 per cent each is allocated for health and education, while 2 per cent is exclusively allocated for supporting primary education; additional health and social welfare cesses also apply to customs duties.

In December 2025, the Modi government passed the Health Security se [to] National Security Cess Bill, imposing a production-linked cess on mechanised manufacturers of “demerit” goods, including pan masala and tobacco, with the proceeds intended for health and national security.

Meanwhile, the second-largest short transfer in 2024-25 concerned the Prarambhik Shiksha Kosh (PSK), which funds school education schemes under the National Education Mission, including PM Poshan and Samagra Shiksha Abhiyan; although Rs 42,170 crore was collected, only Rs 40,900 crore was transferred.

The Investor Protection and Education Fund faced a short transfer of Rs 1,105 crore, while the Oil Industry Development Fund saw Rs 201 crore withheld.

To explain the discrepancies, the Finance Ministry cited an excess transfer of Rs 1,681 crore to MUSK and said subsequent revised estimates would cover the shortfalls, while arguing that retaining funds in the Consolidated Fund of India was preferable to maintaining idle balances amid substantial government borrowing.