Parliament’s Winter Session: The central government is going to present the ‘Health Security to National Security Cess Bill, 2025’ on Monday, under which a new cess will be imposed on pan masala and other sin goods on the basis of production capacity. This cess will replace the GST compensation cess.
Health Security National Security Cess Bill 2025: The winter session of Parliament is starting today, Monday. The central government is going to take a big step to strengthen public health and national security in the country. On December 1, Finance Minister Nirmala Sitharaman will present the ‘Health Security to National Security Cess Bill, 2025’ in the Lok Sabha, under which a new cess will be imposed on pan masala and other specified sin goods. As soon as this bill came, there has been a stir in many industries across the country, especially in the pan masala and tobacco sectors.
What is the new Health and National Security Cess?
Under this proposed law, the government can impose cess on any product, including pan masala, which is considered a risk to public health and national security. It is expected to start with Pan Masala, while in future it can also be applicable to products like cigarettes, zarda, gutkha, chewing tobacco except beedi.
How will the cess be charged?
The most important thing about the bill is that cess will be imposed on the basis of production capacity and not on sales. Factories will declare the capacity of their machines themselves. For example, if a machine has the capacity to make more than 1,000 to 1,500 sachets or containers of 2.5 grams each, the cess per month per machine will be ₹30.3 lakh. If the weight of these pouches is more than 2.5 grams but less than 10 grams, the cess per machine per month is expected to be ₹1,092 lakh and if the weight of the container is more than 10 grams, the cess amount per machine per month will increase to ₹2,547 lakh.
New cess will replace GST compensation cess
GST Compensation Cess was imposed from 2017 to the states to meet the revenue loss. Now the payment of back-to-back loans taken during the Covid period is almost complete, hence this cess will be removed in a phased manner by December 2025. In the new system, 28% GST and normal tax will continue on all tobacco products, but Health and National Security Cess will be imposed on all sin goods except beedis.
Why is new cess necessary?
- To cover increasing health expenditure
- To strengthen the National Security Fund
- To discourage consumption of products like pan masala-tobacco
- To implement digital and high-tech regulations
Big blow to insurance sector too
The government is also going to introduce the Insurance Laws Amendment Bill, 2025 in the same session, through which FDI in the insurance sector will be increased from 74% to 100%. This is being considered a big opportunity for foreign investors and a guarantee of fast growth for companies.
What will be expensive, who will be affected?
The new cess will impact the pan masala industry, gutkha-zarda manufacturers, chewing tobacco companies and cigarette companies the most. Consumers purchasing these products will also be affected. If prices increase, expenses will also increase.