The Lok Sabha on Friday passed the Health and National Security Cess Bill, 2025, marking a significant step toward generating dedicated funds for public health and national security. The legislation introduces a special excise cess specifically targeting pan masala, with provisions to extend the levy to other goods if deemed necessary by the government.

Under the proposed law, the cess will apply to machinery installed or processes used in the manufacture or production of pan masala, whether done manually, mechanically, or through hybrid methods. This approach ensures that all operators involved in production, regardless of their tax status, fall under the purview of the levy.

Proceeds collected through the cess will be directed to the Consolidated Fund of India, bolstering the government’s budgetary allocation for national security and public health initiatives. The framework is designed to ensure transparency and accountability in fund utilisation.

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To safeguard revenue, the Bill establishes a comprehensive enforcement framework. This includes provisions for search, inspection, seizure, confiscation of goods and machinery, recovery of dues, imposition of penalties, and arrest in cases of serious contraventions. These measures aim to prevent evasion and ensure compliance.

While initially focused on pan masala, the legislation empowers the government to notify additional goods for the cess in the future. This flexibility reflects the government’s commitment to addressing emerging public health concerns and ensuring security funding through targeted levies.

Industry stakeholders are expected to adapt to the new regulations, which may influence production processes and operational compliance. The move has been welcomed by policymakers as a proactive measure to link taxation directly to social welfare and national security objectives.

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