News: Lok Sabha recently passed Health Security se National Security Cess Bill, 2025 which would levy a special cess on pan masala and use the fund for improving public health and strengthening national security.
About Health Security se National Security Cess Bill, 2025
- The Health Security se National Security Cess Bill, 2025 has been introduced to create a clear legal framework for a special excise cess.
- Intent: To tax pan masala based on production capacity, as it cannot be effectively included in the traditional excise system.
- Key provisions
- Cess framework: The cess will apply to machines installed or processes undertaken to manufacture specific goods (initially pan masala).
- Cess computation: The cess will be calculated based on machine capacity (e.g., pouches or tins per minute) or a flat rate for manual processes.
- Compliance Requirements:
- Registration: Businesses must register and declare machinery or processes involved in the manufacturing.
- Self-Declaration of Machinery / Process Parameters: Taxable person must submit self-declaration of machines/processes. Details declared may be verified or calibrated by the proper officer
- Monthly Payments and Returns: The cess are to be paid monthly, with returns filed by the 7th of each month.
- Abatement: If machines are inactive for 15+ days, a reduction in cess will apply.
- Monitoring and Enforcement: The Bill establishes a framework for scrutiny, audit, and inspection of manufacturing processes and machines.
- Appeals Process: A multi-tier appeal system allows businesses to challenge decisions, starting from the Appellate Authority to the Supreme Court.
- Penalties: Penalties for non-compliance include monetary fines, confiscation, imprisonment, and other enforcement actions.
- Revenue Use: The funds generated will be credited to the Consolidated Fund of India and used for activities related to national security and public health.
- GST Impact: The cess is separate from the Goods and Services Tax (GST) and will not impact GST revenues.
- Pan masala will continue to be taxed at a maximum 40% rate under GST based on consumption.
