₹9,222 Crore in Cess Never Reached Its Designated Funds, PAC Notes

Synopsis

According to the audit report of the Union accounts for 2024-25 by the Comptroller and Auditor General, ₹9,222 crore of cess and levies has not been sent to four designated funds. The P.A. Committee, headed by K.C. Venugopal, had probed the finding on September 8 in the hearing with the officials of the Finance and Health Ministry. The Finance Ministry said it had been reported on an excess transfer elsewhere and the borrowing rates. The episode brings back the age-old debate on the proper accounting of earmarked taxes.

Named and kept in the records

A cess is charged to the taxpayer on a promise - that is, money is collected for a specific purpose. The accounting road is dedicated to it. Funds are raised and deposited to the Consolidated Fund of India and subsequently re-transferred, subject to the approval of Parliament, into a dedicated fund in the Public Account. For four of these funds, the second step was not met in the audit process for 2024-25.

What the audit found

The Report of the CAG was laid down in Parliament on 2nd April 2026. It had reported a transfer of ₹9,222 crore to four specific reserve funds during 2024-25, which is a small amount.

According to The Wire's report based on the CAG's statement, the break-up is as follows. The shortfall in Health cess collected was ₹21,085 crore as compared to the amount transferred to the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN) of ₹14,439 crore.

School education is funded through the Prarambhik Shiksha Kosh (PSK), which was ₹1,270 crore short of the funds. The Investor Protection and Education Fund (IPEF) was short by ₹1,105 crore and Oil Industry Development Fund (OIDF) by ₹201 crore.

The committee's examination

The PAC held a hearing on Tuesday, early in September, with officials of the Finance and Health ministries. The examination was based on Para 3.3.1 of CAG Report No. 6 of 2026.

The Finance Ministry's take on it

The ministry has revealed to the panel it transferred the money to Madhyamik aur Ucchatar Shiksha Kosh, an excess of ₹1,681 crore. It also said that it would make up for the shortfalls in the following year's revised estimates. The ministry said it did not want to keep idle balances as it has to open ₹15.74 lakh crore loans in 2024-25 against spending of ₹46.53 lakh crore,

A separate reply from the Health Ministry was received. In January 2026, it had told the auditors that the Finance Ministry is the nodal ministry for collecting cess and its allocation to the reserve funds, while the CAG had seen a specific reply on the shortfall pending.

A finding with a history

It isn't a new problem. According to the CAG report 2023-24, the losses in the cess transfer since 1974 come to ₹3,69,307 crore.

The PAC in its 69th Report in 2023 had recommended scientific assessment prior to imposing the levy, periodic review of its objective and regular crediting of proceeds to the reserve funds.

If health alone, then according to the data compiled by Jan Swasthya Abhiyan, a total of ₹96,627 crore was collected over the last seven years while only ₹46,554 crore was transferred, making a net loss of ₹50,072 crore, or almost 52 per cent.

The network, which is a group of public health professionals, stated the money could have been used to "enhance emergency and critical care services.

What to watch

PAC findings are shared with ministries concerned for action taken replies. The weight of the scale is added to the question. The CAG report estimates that collections from cess and surcharge stood at ₹3,89,220 crore or 10.25 per cent of gross tax revenue in 2024-25.

Will demonstrate how the question is resolved if the ministry chooses to establish a crediting timetable, or restates its accounting position.