Agriculture Infrastructure and Development Cess (AIDC)

Agriculture Infrastructure and Development Cess (AIDC)

Part of: Prelims and GS – III – Economy

Context In a bid to curb the persistently high inflation in edible oils, the government has decided to exempt crude palm, soya-bean and sunflower seed oils from customs duty, and slash the Agriculture Infrastructure and Development Cess (AIDC) levied on their imports from October 14 till March 31, 2022.

Key takeaways

• Imports of crude palm, soya-bean and sunflower seed oils attract a basic customs duty of 2.5% and an AIDC of 20%. 
• The customs duty has been dropped to zero, while the cess has been reduced to 5% for crude soya-bean and sunflower seed oil. In the case of crude palm oil, the AIDC cess has been reduced to 7.5% instead of the original 20%.
• Benefits: The decision would help in reducing price burden on ultimate consumers amid the surging edible oil prices.

What is Agriculture Infrastructure and Development Cess (AIDC)?

• Agriculture Infrastructure and Development Cess (AIDC) was proposed in the Budget 2021-22.
• Purpose: To raise funds to finance spending on developing agriculture infrastructure aimed at not only boosting production but also in helping conserve and process farm output efficiently.
• The new cess will be levied on 29 products, prominent among which are gold, silver, imported apple, imported alcohol (excluding beer), imported pulses, imported palm oil, imported urea, and petrol/diesel including branded ones.
• It will only offset the reduction in customs or excise duty and thus will not raise the tax incidence for consumers.

Do you know?

• Drawing power from Articles 270 and 271 of the Constitution, the Centre collects cess and deposits it in the Consolidated Fund of India. 
• However, the money is then supposed to be transferred to a segregated fund to be used for specific purposes.