The Cess Act provides for the levy and collection of Cess on water consumed by persons carrying on certain industries and by Local Authorities. This was with the view to augment the resources of the Central Pollution Control Board and the State Boards and to encourage conservation of water. Accordingly, the State Pollution Control Board are collecting water cess from the categories of industries as mentioned in the "SCHEDULE I" of the Water (Prevention and Control of Pollution) Cess Act, 1977 and as amended upto date. On the basis of the water consumption return submitted by the consuming authority in the proper format (Form-I) of the Water (Prevention and Control of Pollution) Cess Rule, 1978, the water cess have been collected as per 'SCHEDULE II" of the Water (Prevention and Control of Pollution) Cess (Amendment) Act, 1991.

The Cess so collected by the Board is remitted to the Consolidated Fund of India. As per the revised formula effective from 1st January, 1998 of water cess reimbursement to SPCBs, upto 80% of the cess amount collected by the State Boards will be reimbursed to them in accordance with Section 8 of the Water Cess Act, 1977 for meeting their approved expenditure requirements. Of the cess amount collected, upto 20% will remain with the Central Government for undertaking specific projects in any part of the country through the Central Pollution Control Board subject to approval by the Central Government.

The State Board has identified and covered all the Industries (Major / Medium) and also small-scale industries which are coming under the purview of the Water Cess Act. Different steps have been taken for collecting water cess from some defaulting units, local authorities , Railways etc.