Health Security se National Security Cess Bill, 2025 | 08 Dec 2025

Source:IE 

Why in News?  

The Lok Sabha has passed the Health Security se National Security Cess Bill, 2025, which introduces a special cess on paan masala manufacturing units and any additional goods notified by the Government.  

  • The revenue generated will be used to strengthen national security and improve public health infrastructure. 

What are the Key Highlights of the Health Security se National Security Cess Bill, 2025?

  • Purpose of the Cess: The Bill establishes a special excise cess to create a stable, rule-based revenue stream for funding India’s national security and public health needs.  
    • The proceeds of this cess will be credited to the Consolidated Fund of India. 
    • The cess is imposed on the machinery installed or the processes undertaken (whether manual or hybrid) for manufacturing specified goods, and is applicable in addition to existing duties and taxes. 
  • Goods Covered: Initially, the cess applies only to pan masala, but the Government is empowered to notify additional goods in the future.  
    • The Government may increase the cess up to twice the existing rate in public interest, exempt certain persons or processes, and add new goods to the cess schedule. 
    • The Bill introduces a capacity-linked monthly levy calculated using machine parameters such as maximum rated speed, pack weight or a flat monthly rate for manual process. 
  • Taxable Persons: Any individual or entity that owns, operates, or controls machinery or processes used for manufacturing specified goods must pay the cess.  
    • Liability applies regardless of the person’s existing tax status, ensuring comprehensive coverage of all producers. 
  • Enforcement Framework: The Bill includes a stringent enforcement system prescribing penalties, prosecution, arrest, and confiscation for violations such as undeclared machinery, cess evasion, falsification of records, or obstruction of officials. 
  • Appeals Authority: A multi-tier appellate mechanism allows taxpayers to challenge decisions before the Appellate Authority, then the Tribunal, and subsequently the High Court and Supreme Court, ensuring procedural fairness and legal remedy at all stages. 

What is Cess? 

  • About: It is a tax on tax imposed by the government for a specific, earmarked purpose (public good). Cess is levied in addition to existing taxes such as excise duty or income tax. 
    • It is collected until enough funds are raised for the designated objective. 
  • Constitutional Basis: The 80th Amendment formally amended Article 270, explicitly excluding cesses and surcharges from the divisible pool (revenue from cesses is not shared with states).   
    • Cesses are recognized in the Constitution under Article 277 and Article 270 (which outlines the revenue-sharing framework between the Union and States).  
  • Examples of Cess: Education Cess, Swachh Bharat Cess, and Krishi Kalyan Cess.

Tax Vs Cess Vs Surcharge

Tax 

Cess 

Surcharge 

General compulsory levy for government revenue 

A tax on tax for a specific purpose 

Extra tax on tax applied to high-income taxpayers 

Used for any public expenditure 

Used only for the earmarked purpose 

Adds revenue to Union; no specific purpose 

Shared with states (divisible pool) 

May or May not be shared with states 

Not shared with states 

Permanent 

Temporary, collected till funds are adequate 

No fixed period 

Examples: Income Tax, GST, Customs Duty 

Examples: Education Cess, Clean Energy Cess, Swachh Bharat Cess 

Examples: Surcharge on income above ₹50 lakh 

Frequently Asked Questions (FAQs) 

Q. What is the objective of the Health Security–National Security Cess Bill, 2025? 
To create a stable revenue stream for funding national security and public health through a special excise cess. 

Q. What is a cess in taxation? 
A cess is a tax on tax levied for a specific, earmarked purpose like education, health, or sanitation. 

Q. How is cess different from a normal tax? 
A tax is for general revenue, while a cess is earmarked for a specific objective. 

Summary 

  • The Health Security–National Security Cess Bill, 2025 introduces a special excise cess on pan masala manufacturing machinery to fund national security and public health. 
  • The cess is capacity-based, applied in addition to existing taxes, and credited to the Consolidated Fund of India. 
  • The government can expand it to more goods, revise rates, and grant exemptions in public interest. 
  • The Bill also creates a strict enforcement and multi-tier appeals framework to ensure compliance. 

UPSC Civil Services Examination Previous Year Question (PYQ) 

Prelims

Q. The sales tax you pay while purchasing a toothpaste is a (2014)

(a) tax imposed by the Central Government 

(b) tax imposed by the Central Government but collected by the State Government 

(c) tax imposed by the State Government but collected by the Central Government 

(d) tax imposed and collected by the State Government 

Ans: (D)