Story so far: Finance MinisterNirmala Sitharamanintroducedthe Health SecurityseNational SecurityCessBill, 2025 on Thursday (December4, 2025), kicking off the Centre’s reform agenda for Parliament’s Winter session.The Bill proposes to levycesson “machines installed, or other processes undertaken in the manufacture of pan masala” to fund India’s ‘health and national security’.
The Lok Sabha has already passedthe Central Excise (Amendment) Bill, 2025andtheamendedManipurGoods and Services Tax (GST)Bill, 2025whiletheabove-mentionedBillis currently slated for debate and passage. Introduced as a money Bill,the Health security seNational securityCessBill, 2025 needonly be passed by the Lok Sabha.The Upper House has14 daysto provide its recommendations on such a Bill which may or may not be accepted by the Lok Sabha.
What doesthe Billpropose?
Termedthe ‘Health SecurityseNational SecurityCess’,the Centre proposes to tax all those people who have machines installed for productionof pan masala. The machines include fill and seal machines and anypacking machine used to fill panmasala inin pouches,tinsor other containers.
Thecesswill be decidedas pernumber of pouches(tins or containers) produced by themachine per minuteandpan masala weight packed in a pouch,tinor container. It will be collected at the beginning of each month, but no later than the seventh. Those paying thecesscanself-declare the machine installed or processes undertaken in theirfactories producing pan masala.Centrecan exempt anyone orany class from thiscess, if itdeemsnecessary in public interest.
Thecesshas been classified into four categories based on the number of pouches it producesper minute–upto500, 501-1000, 1001-1500 and above 1500. Correspondingly based on the weight of pan masala packed in each pouch (varying from 2.5 grams to above 10 grams), thecessvaries from ₹101 lakh per month per machine to₹2.5 crores(approximately).It alsocriminalisesanyviolationsupto5 years imprisonment.
India’s tobacco use
According to the Global Adult Tobacco Survey (GATS-2),nearly 42%of men and 14% of women in India use tobacco. Moreover, Indiaamounts to 70%ofthe world’ssmokeless tobacco (SLT) usersi.e.gutkha, pan masala and among smoked tobacco, bidis are preferred over cigarettes, especially in rural and lower income families.As both SLT and smoked tobacco use increase cancer risk in lung, head, neck, stomach, and pancreas, India ranks first globally inmale cancer deaths.
Experts found that theeconomic cost of both SLT and smoked tobacco amounted to ₹1.77 lakh crore in 2016-17.Centre’sban on use of gutkha hasmore or less remainedineffective as the tobacco industryhas ensured wide accessibility of its products via policy interference, pricing tactics, targetedmarketingand dense tobacco shop networks.ThoughWHO has recommended taxing tobacco products at 75% of its MRP, very few have followed through.Also, studyhas shown thataffordabilityof cigarettes and bidisremainthe main hamper. 87% ofIndian cigarette vendors sell single sticks,frequentlyoperatingnear tea stalls, found research.This practice is banned in 88 countries but not in India.
What are the issues raised?
While titled ‘Healthsecurity seNationalsecurity’,the Bill does not have any provisions toallocatethecesscollected to anti-tobaccocampaigns/schemes.In Parliament, many MPs raised this policy gap,statingthat the increasedcesswill affect incomes of obacco farmers and labourers working in beedi rolling factories – mostly women.Opposition MPs also highlighted that the Bill was aimed to fill a fiscal hole in the Centre’s coffers due to the discontinuation of ‘compensationcess’.
Several members also highlighted that the Bill will not curb tobacco usage and only increase its illegal smuggling. Non-BJP MPsshed light that the Bill does not speak of the devolution ofcessto States, while non-expenditure ofothercesscollected by Centreremainat an all-time high.TMC MPSougataRoy pointed out that the Bill onlyfocusedon the machines and not the actual amount producedanddecriedthecriminalisationof any violations.
Indirectcampaign has been used effectively to advertise their products by these tobacco producing companies, adds Mr. Roy.As advertisements of gutkha, alcohol,cigarrettesare banned, these companies often display ads of ‘elaichipowder’,‘mouthrefreshner’,‘bottled water’,produced by the same company under the same brand – thereby indirectly promoting their tobacco-based products.
In response, Finance Minister Nirmala Sitharaman has claimed that this Bill was aimed to wean farmers away from tobacco, therebyensuredecreasein tobacco cultivation, production,saleand consumption. Moreover, the passage of the Central Excise (Amendment) Bill, 2025 has ensured that Centre will be collecting higher excise duties on tobacco as compensation cess will be discontinued. Ms. Sitharaman has assured that 41% of the duties collected will be distributed among states. A similar arrangement is expected to be followed for the Health security se national security cess.
Published – December 04, 2025 04:50 pm IST
