Health care sector welcomes Bill that taxes pan masala production

Industry says earmarking funds for public health at par with national security will help channel revenue for public health infra

The health care industry has indicated its support for the new Health Security se National Security Cess Bill 2025, which introduces a new cess aimed at generating additional revenue to strengthen India’s public health systems and national security.

 

The Bill, which passed in the Lok Sabha on December 5, proposes to levy a cess on the machinery installed or the processes undertaken for the manufacture or production of goods such as pan masala (and potentially other specified goods in future), whether done through machines, manual operations or hybrid processes.

 

“All revenue collected through the cess will be deposited into the Consolidated Fund of India and earmarked to support initiatives that strengthen health systems and enhance national security,” an industry executive said.

 

Experts said that earmarking of funds for public health at par with national security indicates a key policy shift.

 

Calling the channelling of profits from unhealthy products into public health a progressive approach to health financing, Ameera Shah, president of umbrella body Nathealth, said that investing these revenues in preventive health and robust public health infrastructure is truly the need of the hour.

 

“At a time when India is grappling with the triple burden of non-communicable diseases, infectious diseases and persistent maternal and infant health challenges, strengthening public health systems is essential,” she added.

 

A central feature of the Bill is that the cess will be levied based on production capacity, not on the actual quantity produced or consumed.

 

“This means the tax is tied to the type, speed, and weight-handling capacity of machines, or the nature of manual processes used,” another industry executive added.

 

Manufacturers must self-declare all machinery and manual processes, file monthly returns, and pay the cess by the 7th of each month. For units operating entirely manually, a fixed cess of ₹11 lakh per month will apply.

 

Similarly, machine-based units will be charged based on capacity. For example, a machine packing up to 500 pouches per minute (with each pouch weighing up to 2.5 grams) will attract a cess of ₹1.01 crore per month, while higher-capacity machines (1,001 to 1,500 pouches per minute with heavier pouch weights) may face cess amounts of up to ₹25.47 crore per month.

 

“The Bill also grants the government flexibility to revise cess rates when required in public interest and include more goods over time or offer exemptions where appropriate,” the executive quoted above said.