Introduction of Health Security se National Security Cess Bill, 2025
Union Finance Minister announced the passage of a new Bill in the Lok Sabha, aimed at enhancing public health and strengthening national security by levying a special cess.
Key Features of the Bill
- Name of the Bill: Health Security se National Security Cess Bill, 2025.
- Purpose: To levy a special cess on pan masala to improve public health and national security.
- Replacement: This new cess will replace the existing Compensation Cess under the GST framework.
Details and Implementation
- The cess will be shared with the States as public health is a State subject.
- Pan masala will be taxed at the maximum rate of 40% under GST based on consumption.
- The new cess will not affect GST revenues.
Objectives and Scope
- Primary Intent: To tax the production capacity of pan masala, which is difficult to bring under the conventional excisable regime.
- The cess will be levied on machines installed or processes undertaken for manufacturing pan masala and similar goods.
- It will initially apply to pan masala but may be extended to other goods if necessary.
- Revenue Allocation: To create a dedicated and predictable resource stream for health and national security.
Financial Implications
- Currently, the cess as a percentage of gross total revenue is 6.1%, which is lower than the 7% recorded between 2010 and 2014.
Conclusion
The Bill aims to provide a structured and predictable financial stream to support two crucial areas: health and national security, through the levy on production capacity rather than consumption.