New Delhi, [India] December 1 : After a 'sin tax' on tobacco-related items during the GST rationalisation exercise, Finance Minister Nirmala Sitharaman on Monday introduced 'Healthy Security se National Security Cess Bill, 2025', in the Lok Sabha. The Bill proposed a rigorous new tax regime on pan masala and gutkha manufacturers to fund defence and public health expenditures.
According to the Bill, the proposed cess will be levied on machines installed or processes undertaken for the manufacture or production of specified goods, including pan masala and gutkha.
It says "The Health Security se National Security Cess Bill proposes to levy cess on the machines installed or processes undertaken by which the specified goods, namely, pan masala, is manufactured or produced, whether manually or through hybrid processes."
The legislation lays out an extensive compliance and enforcement framework. It defines taxable persons as those who own, possess, operate or control machines used in the production of specified goods, whether directly or through workers or contracted entities.
The cess will be payable irrespective of production volume, with liability based on machine speed, capacity or process parameters declared by manufacturers.
The bill adds that, "The cess is linked to the production capacity of machines or other processes rather than the quantity actually produced of such specified goods."
The Bill empowers the Centre to increase the cess, up to twice the scheduled amount, in special circumstances and enables exemptions through notification in public interest. Funds collected through the cess will be credited to the Consolidated Fund of India and may be utilised after Parliamentary approval for activities and schemes connected to national security and public health.
The proposed law provides for mandatory registration, monthly returns, and strict audit and assessment mechanisms. It also introduces a wide-ranging penalty structure for non-compliance, including imprisonment for serious offences such as fraud, evasion, or falsification of records.
The Bill also provides detailed provisions for search, seizure, confiscation of goods and machines, and arrest powers for specified officers.
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