The Ministry of Finance (Department of Revenue) has issued Notification No. 02/2026 – HSNS Cess dated January 30, 2026 to amend the Health Security se National Security Cess Rules, 2026.
The amended rules will be effective from 1 February 2026.
The amendments aim to improve the clarity, transparency, and administration of the HSNS Cess, which is levied under the Health Security se National Security Cess Act, 2025 (Act 35 of 2025).
Key Highlights of the Amendments
Introduction of Formula for Determining “Maximum Rated Speed” of Machines
Rule 12(2) has been amended to insert an Explanation defining how the capacity (maximum rated speed) of packing machines is to be calculated.
The formula notified is:
S = (R / G) × n
Where:
- S = Maximum rated speed (pouches/tins/containers per minute)
- R = Motor RPM of the main rotary disc
- G = Overall gear ratio
- n = Number of funnels (horizontal machine) or number of cups (vertical machine)
Substitution of Illustration for Abatement Calculation (Rule 16)
A new Illustration 2 has been inserted to guide taxpayers on claiming abatement of HSNS cess in case of continuous non-operation (exceeding 15 days) of packing machines.
The illustration includes:
- High-speed pouch machine of 700 pouches/minute
- Monthly cess liability: ₹2,02,00,000
- Machine sealed on 20 July and de-sealed on 11 August
- Total continuous non-operation: 22 days
- Resulting abatement: ₹1,43,35,484
Insertion of New Rule 35 – Utilisation of HSNS Cess
A new Rule 35 has been added to provide a structured framework for the use, transfer, and accounting of the HSNS Cess.
Key provisions include:
- Cess (including interest/penalty) shall be credited to the Consolidated Fund of India.
- After Parliamentary appropriation, the amount will be transferred to the Health Security se National Security Cess Fund.
- Ministry of Finance (Department of Revenue) will transfer funds quarterly.
- Fund utilisation shall be restricted to activities related to public health and national security.
- Budget Division (DEA) will decide scheme-wise allocation in consultation with Department of Expenditure.
- Fund accounting and audit will be as per procedures approved by the CAG of India.
Modifications in HSNS Forms
Several corrections and substitutions have been made in statutory forms:
(a) FORM HSNS DEC-01 (Tables A & B)
- “Tracks” replaced with “cups” in multiple column headings.
- Column 13 amended to insert the ratio [9/8].
(b) FORM HSNS CE-01
- “Tracks” replaced with “cups” or “cup/funnel”.
- Column 12 updated to include [8/7].
- Column 13 amended to show capacity format [6×12] or [9×12].
(c) FORM HSNS RET-01
- Numeric correction in example: figure “5” replaced with “4”.
(d) FORM HSNS APL-02
- Reference updated from Section 61 to Section 30.
Objective of the Amendment
The notified changes are designed to:
- Enhance administrative efficiency in assessment and collection of HSNS Cess
- Ensure consistent technical standards for machine capacity evaluation
- Strengthen the accountability and transparency of cess utilisation
- Align procedural forms and schedules with operational realities
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/02/DoR-No.-02-2026-HSNS-Cess.pdf
