Legal Question in Tax Law in India

Tax and cess are broadly of similar nature, i.e., the government levies both through a law and collects through a statutory machinery. While tax is a general collection for meeting a government's expenditure and collection of tax is not required to be explained vis-a-vis any specific expenditure, a cess is generally levied to meet a specific expenditure or objective. For instance, in India there is a Education cess that is intended to meet government's expenses towards setting up education facilities. Similarly, Research and Development Cess is levied to fund R&D activities of the government funded institutions. Practically this difference is for government's internal accounting system and the payer does not ordinarily get to question the end use.

Fee, on the other hand, is levied for a very spcific purpose. It may be levied without requiring a statutory enactment fort hat purpose.