Lok Sabha Clears Cess on Pan Masala Manufacturing Units
Funds to Strengthen National Security and Public Health; Cess to Be Shared with States
- Lok Sabha passes Health Security se National Security Cess Bill, 2025
- Cess to be levied on pan masala manufacturing machinery
- Revenue earmarked for national security and public health
- FM Sitharaman says GST revenues will not be impacted
GG News Bureau
New Delhi, 6th Dec: The Lok Sabha on Friday passed the Health Security se National Security Cess Bill, 2025, paving the way for imposing a cess on manufacturing units of pan masala, with the proceeds earmarked for national security and public health initiatives.
Responding to the debate, Finance Minister Nirmala Sitharaman said the cess revenue would be shared with state governments, underscoring that public health remains a state subject. The bill was cleared by a voice vote.
Sitharaman said the proposed cess aims to create a “dedicated and predictable resource stream” for two domains of national importance. The levy will apply to machines and processes used in the production of pan masala and similar products.
The Finance Minister clarified that the introduction of this cess will not affect GST revenues, as pan masala is already taxed at the maximum 40 per cent GST rate based on consumption. The new cess, she said, will be charged on production capacity, not on sales.
She also noted that the cess, as a percentage of gross total revenue, stood at 6.1 per cent this fiscal, lower than the 7 per cent average recorded between 2010 and 2014.
The bill is expected to bolster funding for critical national security needs and expand public health capacity, marking a fresh attempt to curb the social cost associated with the consumption of pan masala and related products.
