Which of the following statements regarding Cess and Surcharge is are correct 1 Cess is a tax on tax...........

Indian Economic System Budgeting and Fiscal policy

Which of the following statements regarding Cess and Surcharge is/are correct?

1. Cess is a tax on taxes which is imposed for specific purposes.

2. Both cess and surcharge are meant to be temporary in nature.

3. Unlike cess, proceeds of surcharge are shared between the centre and the state governments as per Finance Commission recommendations.

Select the correct option using the codes given below:

1 only

2 only

1 and 2 only

2 and 3 only

Cess and Surcharge :

Article 270 of the Indian constitution allows the Centre to levy cess and surcharge which the Centre need not share with state governments.
While cesses are imposed for specific purposes, surcharges are a tax on taxes.
Both cess and surcharge are meant to be temporary in nature. Example: Swachh Bharat cess
In surcharge, centre need not to stipulate the purpose at the time of levy. It is the discretion of the Union to utilise the proceeds of the surcharges for whichever purpose it deems fit.