The Central Government has notified the Health Security se National Security Cess Rules, 2026, establishing a detailed and comprehensive procedural framework for the implementation of the Health Security se National Security Cess. The Rules have been notified by the Ministry of Finance, Department of Revenue, vide Notification No. 01/2026 – HSNS Cess, G.S.R. 02(E), dated 1st January, 2026.
The Rules have been framed in exercise of the powers conferred under section 35 of the Health Security se National Security Cess Act, 2025 (35 of 2025). As per the notification, the Rules shall come into force with effect from 1st February, 2026.
Objective and Scope
The Health Security se National Security Cess Rules, 2026 aim to provide a clear, transparent and technology-driven mechanism for the levy, assessment, payment and administration of the cess on specified goods. The Rules seek to ensure uniform implementation across the country, promote voluntary compliance, strengthen monitoring and enforcement, and provide certainty to taxpayers through clearly defined procedures.
Registration Framework
The Rules prescribe a mandatory registration process for all taxable persons liable under section 8 of the Act. Applications for registration are to be filed electronically on the designated portal in FORM HSNS REG-01, along with prescribed documents. In cases where machines are installed in more than one factory, separate registration is required for each factory. Upon submission, a temporary registration number is generated to enable payment of cess pending grant of final registration.
The proper officer is required to examine and dispose of registration applications within a defined timeline. Provision has also been made for cancellation and revocation of registration, ensuring procedural safeguards such as opportunity of being heard.
Declaration and Verification of Machines and Processes
To ensure accurate determination of cess liability, the Rules mandate filing of declarations by registered persons regarding machines installed or manual processes undertaken for the manufacture of specified goods. Such declarations are to be filed electronically in FORM HSNS DEC-01.
The proper officer is empowered to verify the declarations through physical inspection of factories, verification of technical specifications, and consultation with third-party technical experts, wherever necessary. Based on such verification, the officer shall confirm the declaration and determine the applicable cess payable, thereby ensuring objective and verifiable assessment.
Payment of Cess and Filing of Returns
The Rules provide a detailed framework for monthly calculation and electronic payment of cess. The cess payable for a month is to be calculated based on the rate specified in Schedule II of the Act, having regard to the maximum rated speed of machines or the nature of manual processes.
Payment of cess is required to be made electronically by the 7th day of the month to which the liability pertains. Monthly returns are to be filed in FORM HSNS RET-01 by the 20th day of the succeeding month. Provisions have also been made for rectification of errors, payment of differential cess, and levy of interest in cases of delayed payment.
Abatement Provisions
Recognising operational realities, the Rules provide a transparent and formula-based mechanism for claiming abatement of cess where machines or manual processes remain non-operational for a continuous period of fifteen days or more. The Rules lay down clear conditions, including prior intimation, sealing of machines by the proper officer, and prohibition of production during the period of non-operation.
A detailed formula has been prescribed for quantification of abatement, along with illustrative examples, ensuring clarity and uniform application. Abated amounts are to be adjusted against future cess liabilities, subject to verification and approval by the proper officer.
Audit, Records and Compliance
To strengthen compliance, the Rules empower tax authorities to conduct audits of registered persons for specified financial periods. Registered persons are required to maintain detailed records relating to machines, production, raw materials, electricity consumption, financial statements and other prescribed documents for a minimum period.
The Rules also provide for compounding of offences, seizure and provisional release of goods or machines, and disposal of perishable goods, with clearly defined procedures and safeguards.
Appeals and Legal Remedies
A structured appellate mechanism has been provided under the Rules. Aggrieved persons may file appeals before the Commissioner (Appeals) and the Appellate Tribunal within prescribed timelines, using specified forms. Provisions relating to production of additional evidence, withdrawal of appeals and revision proceedings have also been incorporated to ensure fairness and procedural clarity.
Use of Technology and Surveillance
In order to strengthen monitoring and enforcement, the Rules mandate installation of Closed-Circuit Television (CCTV) systems covering all areas where packing machines or manual processes are located. Recorded footage is required to be preserved for a minimum period of twenty-four months and made available to authorities on requisition.
Significance of the Notification
The notification of the Health Security se National Security Cess Rules, 2026 marks a significant step towards operationalising the Health Security se National Security Cess Act, 2025. By laying down clear procedures, defined timelines, and technology-enabled compliance mechanisms, the Rules aim to enhance transparency, reduce disputes, and ensure efficient collection of cess, while safeguarding the interests of both revenue and industry.
The Complete Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/01/Notification-related-to-Health-Security-se-National-Security-Cess-Rules-2026.pdf
