In a significant legislative step aimed at strengthening the financial architecture for national security and public health, Parliament has enacted the Health Security se National Security Cess Act, 2025. The Act has received the assent of the Hon’ble President of India on 15 December 2025 and has been published in the Gazette of India (Extraordinary) for general information.
The Act seeks to augment and secure dedicated resources to meet growing expenditure requirements in the areas of national defence, internal security preparedness, and public health systems, through the levy of a specially designed cess on specified goods manufactured or produced using notified machines or processes.
Background and Rationale
India’s evolving security environment and public health challenges require sustained and predictable financial support. Recognising this need, the Government has introduced a targeted cess mechanism that links revenue generation with specific manufacturing activities, particularly those involving notified goods and high-capacity machines or processes.
The Health Security se National Security Cess Act, 2025 has been enacted to ensure:
- A dedicated and non-lapsable revenue stream for national security and public health,
- Greater transparency and predictability in funding,
- An administratively efficient levy mechanism aligned with machine capacity and production parameters.
Salient Features of the Act
- Short Title and Commencement
The legislation is titled the Health Security se National Security Cess Act, 2025. It shall come into force on such date as may be notified by the Central Government in the Official Gazette.
- Scope and Coverage
The Act applies to specified goods listed in Schedule I, or such other goods as may be notified by the Central Government from time to time. The cess is levied on:
- Machines installed, or
- Processes undertaken
for the manufacture or production of such specified goods.
- Taxable Persons
Any person who owns, possesses, operates, manages, leases or otherwise controls a machine or undertakes a process for the manufacture or production of specified goods is treated as a taxable person under the Act. This applies irrespective of:
- The quantity manufactured,
- Whether manufacturing is undertaken directly or through job workers,
- Any alternate or concessional taxation schemes under other laws.
- Levy and Collection of Cess
A Health Security se National Security Cess shall be levied and collected from every taxable person. The cess:
- Is levied in addition to any other duties or taxes chargeable under existing laws,
- Is computed on a monthly basis,
- Is linked to machine speed, capacity, nature of process and packing weight.
The Central Government has also been empowered to grant exemptions, either wholly or partially, in public interest, subject to conditions.
- Computation Methodology
The cess is computed based on:
- Maximum rated speed of machines,
- Capacity of manufacturing processes,
- Weight of goods packed in pouches, tins or containers.
Separate computation mechanisms are provided for:
- Manufacturing with the aid of machines, and
- Manufacturing undertaken wholly by manual processes.
Provision has also been made for abatement of cess in cases where machines or processes remain inoperative for a continuous period of fifteen days or more.
- Power to Increase Cess in Special Circumstances
In situations warranting enhanced resource mobilisation, the Central Government may, in public interest, increase the cess up to twice the specified amount for such period as may be notified.
Purpose and Utilisation of Cess Proceeds
The cess levied under the Act shall be utilised exclusively for:
- Meeting expenditure on national security, and
- Strengthening public health systems.
The proceeds shall first be credited to the Consolidated Fund of India, and thereafter utilised, following due parliamentary appropriation, for activities, schemes and programmes notified by the Government.
Registration, Returns and Compliance
- Mandatory registration of all taxable persons has been provided for.
- Taxable persons are required to file self-declarations detailing machines, processes and parameters relevant for cess computation.
- Monthly self-assessed returns and timely payment of cess have been prescribed.
- Robust provisions exist for scrutiny, audit, verification and assessment to ensure accuracy and compliance.
Enforcement, Audit and Safeguards
The Act contains a comprehensive framework for:
- Audit and inspection of premises,
- Access to records and business documents,
- Determination and recovery of cess not paid or short paid,
- Search, seizure and confiscation in cases of evasion.
Detailed provisions relating to interest, penalties, offences, prosecution, compounding, and arrest have been incorporated to ensure deterrence against non-compliance while providing due process and safeguards.
Appeals and Legal Remedies
A structured appellate mechanism has been established, providing for:
- Appeals to the Appellate Authority,
- Appeals to the Appellate Tribunal,
- Further appeals to the High Court and the Supreme Court on substantial questions of law.
Rule-making and Parliamentary Oversight
The Central Government has been empowered to make rules for effective implementation of the Act. All rules and notifications issued under the Act shall be laid before both Houses of Parliament, ensuring legislative oversight and transparency.
Conclusion
The Health Security se National Security Cess Act, 2025 represents a focused and forward-looking legislative initiative aimed at ensuring sustained financial support for India’s national security priorities and public health infrastructure. By introducing a transparent, capacity-based cess mechanism, the Act reinforces the Government’s commitment to safeguarding national interests while strengthening public welfare systems.
The Act can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/THE-HEALTH-SECURITY-SE-NATIONAL-SECURITY-CESS-ACT-2025.pdf
