What is a cess?
Cess is essentially a type of tax that is levied by the govt. The difference between a cess and other taxes is that a cess is for a specific objective or a specific purpose. It is also temporary in nature, which means that once the govt’s objective is achieved, the cess can be removed. A cess can be levied on income or it can be levied on goods and services.
Let’s look at some examples of cess. You’ve got the swachh bharat cess of 0.5%, so all the money which is collected from this cess goes towards the swachh bharat abhiyan. Education cess was also introduced to provide education to economically weaker sections. Krishi Kalyan cess was imposed to develop the agriculture sector. In case of any big natural disaster, a disaster relief cess can also be imposed. For instance, after the Kerala floods in 2018, the state govt imposed a 1% calamity cess.
What is Revenue Deficit?
A term that crops up often with respect to the budget. We know that the govt earns money from various sources, taxes, profits of govt cos etc. All of these are ways that the govt earns money. Every year, govt expects or projects how much its earnings or revenues are going to be for the next year. Sometimes, expectations and reality can be quite different. So when the actual revenue of the govt turns out to be less that what the govt had expected its revenue to be, it is called as revenue deficit.