The Public Accounts Committee (PAC) on Tuesday (September 8, 2026) expressed concern over the reported failure to transfer cess and levy collections to designated reserve funds, with members questioning the Union Finance Ministry’s explanation on the issue and reiterating earlier recommendations that such collections be used only for the purposes for which they were raised.
₹9,222 crore collected through various cesses and levies was not transferred to four designated reserve funds during the year, according to an audit examination for 2024-25. The findings form part of Paragraph 3.3.1 of the Comptroller and Auditor General’s (CAG’s) Report No. 6 of 2026.
The report had recommended scientific assessments of the amount and duration of cess collections, periodic reviews to evaluate whether intended objectives had been achieved, and regular crediting of cess proceeds to reserve funds. Ignoring the directions of the PAC, which is a parliamentary standing committee, constitutes an insult to Parliament, Mr. He further argued that cess collections should be utilised for the purposes for which they are raised and not to finance the government’s budgetary deficit. It is an amount collected from everyone, whether they are income tax payees or not, from the middle-class to the poor, Mr. Venugopal pointed out. The Finance Ministry has contested some of the audit findings, arguing that the assessment of Health and Education Cess transfers excluded the Madhyamik and Uchchtar Shiksha Kosh (MUSK).
Venugopal said the issue had already been flagged by the committee in its 69th Report, tabled in August 2023. In 2024-25, the Union government collected ₹3,89,220 crore through cesses, charges and levies, accounting for 10.25% of its gross tax revenue. The CAG found that the largest shortfall that year was linked to the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN), where only ₹14,439 crore was transferred against collections of ₹21,085 crore, leaving a gap of ₹6,646 crore. It said that against collections of ₹84,339 crore in 2024-25, transfers to the three designated funds totalled ₹86,020 crore, resulting in a net excess transfer of ₹1,681 crore. The Ministry also said that allocations made in the Revised Estimates for 2025-26 would address earlier shortfalls. It further argued that maintaining large idle balances in reserve funds was fiscally imprudent at a time when the government had borrowed about ₹15.74 lakh crore in 2024-25 to finance expenditure of ₹46.53 lakh crore, adding that such balances increased government liabilities.
He also noted that cess collections are not part of the divisible pool of taxes and are therefore not shared with States.
PAC chairperson and senior Congress leader K.C, according to sources. Venugopal said. This, he said, makes the problem further acute since the Central government must utilise this amount to renew the facilities available to citizens. The higher allocation to MUSK offset the PMSSN shortfall, according to the Ministry.
