The Comptroller and Auditor General of India (CAG) has raised serious accountability concerns over the Union Ministry of Finance’s handling of Health and Education Cess, flagging the non-transfer of ₹43,426.35 crore collected as health cess to designated reserve funds during the period from 2018–19 to 2023–24. The findings are contained in the CAG’s Audit Report on Union Government (Finance Accounts) for the fiscal year 2023–24 (Report No. 16 of 2025).
According to the audit report, the total collection under cess and surcharge during 2023–24 stood at ₹4,88,316 crore, accounting for 14.09 percent of the gross tax receipts of the Union government. Except for the GST Compensation Cess, these revenues are not shared with the states. The CAG noted that such earmarked levies, including those for health, education, infrastructure and agriculture, are meant to be used strictly for their stated purposes.
The audit report provides a detailed picture of cess and surcharge collections over a five-year period from 2019–20 to 2023–24, showing a steady increase in reliance on cess and surcharge as revenue instruments. Health and Education Cess alone rose from ₹39,241 crore in 2019–20 to ₹71,159 crore in 2023–24.
From April 1, 2018, the earlier three percent education cess was replaced with a four percent Health and Education Cess. As per government decisions, 25 percent of the proceeds were to be credited to the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN), 50 percent to the Prarambhik Shiksha Kosh, and the remaining 25 percent to the Madhyamik and Ucchatar Shiksha Kosh. However, the CAG observed that for several years the Union government failed to create a separate accounting head for transferring these receipts, retaining them instead in the Consolidated Fund of India.
Following repeated objections from the CAG that such retention violated constitutional principles, the Union Cabinet approved the creation of PMSSN as a reserve fund under the Public Accounts in March 2021. Despite this, the audit shows that the Ministry of Finance continued to delay or avoid full transfers.
The CAG data reveal that between 2018–19 and 2021–22, no amount whatsoever was transferred to PMSSN, despite collections totalling ₹75,542.25 crore as the health share of the Health and Education Cess during this period. In 2022–23, the Ministry transferred ₹18,339.27 crore, marginally exceeding that year’s health share, but this did not offset the accumulated backlog. In 2023–24, against a required transfer of ₹17,789.75 crore, only ₹13,776.63 crore was credited, resulting in a short transfer of ₹4,013.12 crore for that year alone. Cumulatively, the untransferred amount stood at ₹43,426.35 crore as of March 31, 2024.
Reacting to the findings, Jan Swasthya Abhiyan India (JSAI) demanded that the Union government come clean on the continued non-transfer of health cess receipts, particularly for the years 2018–19 to 2021–22, including the period after the reserve fund was formally created. JSAI national convenors Amulya Nidhi and Gourang Mohapatra questioned why the Ministry of Finance failed to credit the health cess to PMSSN even after March 2021, retaining the funds in the Consolidated Fund of India instead.
They pointed out that as of March 31, 2023, the total amount yet to be transferred to PMSSN stood at ₹57,752.50 crore, of which ₹39,413.23 crore remained unpaid even after accounting for partial transfers. This figure rose further to ₹43,426.35 crore by March 31, 2024. JSAI stated that such practices undermine public confidence, as citizens cannot be assured that the health cess collected from them is actually being spent on healthcare.
JSAI also highlighted the CAG’s observation that during 2023–24 the Ministry of Finance indulged in short-transfer of cess receipts, depriving PMSSN of ₹4,013.25 crore. The organisation said this amount was instead retained as part of discretionary budgetary support from the Consolidated Fund, contrary to constitutional provisions. According to JSAI, such short transfers violate Article 266(2) of the Constitution, which governs the treatment of public accounts and earmarked funds.
Calling for accountability, JSAI urged the CAG and the Public Accounts Committee of Parliament to take strong action against what it described as a systematic dilution of constitutional safeguards governing earmarked public revenues.
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