Our Bureau
New Delhi
The Indian government has introduced the Health Security se National Security Cess Bill, 2025, proposing a new cess on pan masala and gutkha products to fund public health and national security expenditures. The bill will impose the cess on any entity owning, operating, managing, or controlling machinery used in manufacturing these products, with the cess rate determined by the machine’s production capacity rather than output volume. Finance Minister Nirmala Sitharaman tabled the bill in the Winter Session of Parliament as part of a crackdown on the gutkha and pan masala industry, aiming to regulate the sector more strictly and generate additional revenue for essential government programs.
The new legislation replaces the GST compensation cess, which is set to end after loans taken for GST compensation are fully repaid. Under the bill, tobacco products will continue to attract excise duty of 40% plus GST, while pan masala will also incur the new Health Security se National Security Cess. The government retains powers to increase the cess up to twice the scheduled amount if necessary and can grant exemptions through notifications in the public interest. Revenue collected will be credited to the Consolidated Fund of India and used only after Parliamentary approval for national security and public health initiatives.
The bill also mandates registration for manufacturers and the submission of monthly returns. Severe penalties, including fines and imprisonment of up to five years for non-compliance, are proposed to ensure strict enforcement. This move reflects the government’s heightened focus on addressing the health damage and security concerns posed by the tobacco and pan masala industries, signaling a tighter regulatory framework and tougher fiscal measures to curb their negative impact on society and national well-being.
