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AGRICULTURE : Infrastructure & Development Cess

Cess is a kind of tax on tax. Cess is generally levied for promoting specific services like health, education, etc. till the time the government gets enough money for the same. It is levied on high-income group people.

On 1 February 2021, Nirmala Sitaraman announced the union budget 2021 which included a cess on certain items including petrol, diesel, gold, and some imported agricultural products. This cess is known as Agriculture Infrastructure and Development Cess. AIDC will help to modernize the agriculture sector and provide much-needed infrastructure to boost production and distribution.

“There is an instantaneous need to improve agricultural infrastructure in order that we produce more, while also conserving and processing agricultural output efficiently,” the finance minister said in her Lok Sabha speech.

AIDC of Rs. 2.5 per liter has been imposed on petrol & Rs. 4 per liter consequent to the imposition of AIDC on petrol and diesel. The basic excise duty (BED) & special additional excise duty (SAED) rates have been reduced so that the consumer does not bear any additional burden. These have now been deducted to Rs 1.4 and Rs 11 per litre, respectively. The cess of import of gold and silver will be 2.5% but the customs duty has come down by 5%. This can be seen as the government’s intention to pare down on its high indirect collections on fuels. AIDC on alcoholic beverages will be 100% as it is seen as a luxury indulgence item that the people go for when they have discretionary money to spend. The items targeted are mostly the items that would not have a major impact on a huge section of the population. The finance minister had said that the levies are on a small set of items only and care has been taken to ensure that the effect is minimal.

A 1000 more Mandis are planned to be integrated with the electronic national market and Agri infra funds would be made available to APMC’s (Agriculture Produce market committee) augmented infrastructure facilities. The central excise and custom duties are divided between center and the state while the cess imposed by the center goes to the central govt and states receive no part of the collection via cess.

The finance ministry is yet to divulge the amount of revenue that states will lose due to the duty. However, finance secretary Ajay Bhushan Pandey said that they have imposed agri cess on about 14-15 items. The total amount that they estimate is Rs. 30,000 crores. Blended fuel which incorporates M-15 petrol and E-20 petrol are going to be exempted from cess and surcharge on the lines of other blended fuels like E-5 and E-10 if these blended fuels are made of duty paid inputs.



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