The Health Security Se National Security Cess Act, 2025 has officially become law after receiving the President of India’s assent on December 15, 2025, marking a significant fiscal and policy development in the 76th year of the Republic of India. The Act will come into force on a date to be notified soon by the Central Government through an official Gazette notification.
This new legislation establishes a dedicated financial framework to support national security and public health initiatives by levying a specific cess on selected manufacturing activities.
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Health Security Se National Security Cess Act, 2025 Purpose and Legislative Intent
The primary objective of the Health Security Se National Security Cess Act, 2025 is to augment government revenues for two critical national priorities:
- Strengthening national security, and
- Promoting public health infrastructure and programmes.
To achieve this, the Act introduces a cess on machines or processes used in the manufacture or production of specified goods, ensuring that manufacturing-intensive sectors contribute proportionately to broader national objectives. The legislation aligns with the constitutional responsibility of the State to safeguard security and public health.
Short Title and Commencement
As per the official notification:
“This Act may be called the Health Security Se National Security Cess Act, 2025. It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.”
Until such notification is issued, the cess will not be enforceable.
Scope and Key Definitions
The Act provides comprehensive definitions to ensure clarity and effective implementation. Key terms defined include:
- Cess
- Factory
- Machine
- Manufacture
- Process
- Specified goods
- Taxable person
Broad Meaning of ‘Manufacture’
The term manufacture has been defined expansively. It includes not only production but also:
- Packing and repacking
- Labelling and relabelling
- Alteration of retail sale price
These activities are covered even if they do not independently amount to traditional manufacturing, thereby widening the cess base.
Who Is a Taxable Person?
Under the Act, a taxable person includes any individual or entity that:
- Owns, possesses, operates, or manages a machine, or
- Undertakes any manufacturing or production process of specified goods
This liability applies irrespective of actual production levels and regardless of exemptions or composition schemes available under other tax laws.
Multi-stage Manufacturing
Where manufacturing is carried out by multiple persons or across several stages, the person undertaking the final process that renders the goods marketable will be treated as the taxable person.
Levy of Health Security Se National Security Cess
With presidential assent in place, the Act authorises the levy and collection of cess on:
- Machines installed for manufacturing or producing specified goods, and
- Manual manufacturing processes undertaken without the aid of machines
Importantly, this cess will be levied in addition to all existing taxes and duties.
Computation of the Cess
Machine-Assisted Manufacturing
For machine-based production, the cess will be calculated monthly based on:
- Maximum rated speed of the machine
- Maximum weight of goods per pouch, tin, or container
- Corresponding monthly cess rate, as prescribed in Schedule II of the Act
Manual Manufacturing
In cases where production is entirely manual, a fixed monthly cess per factory will apply, provided that:
- No machine capable of assisting any part of the manufacturing process is installed
Abatement Provisions
The Act allows abatement (reduction) of cess liability if:
- A machine or manual manufacturing process remains non-operational for a continuous period of 15 days or more during a month
This provision offers relief to manufacturers during prolonged shutdowns or disruptions.
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Government’s Power to Exempt or Enhance Cess
In the public interest, the Central Government has been empowered to:
- Grant full or partial exemption from the cess, and
- Increase the cess up to twice the prescribed rate for a specified period
Such measures will be notified officially and may be used as policy tools during exceptional circumstances.
Utilisation of Cess Proceeds
The cess collected under the Act will be credited to the Consolidated Fund of India. Subject to parliamentary approval, the funds may be utilised for:
- Enhancing national security capabilities
- Funding public health schemes and initiatives
The Central Government may also notify specific programmes, schemes, or activities for targeted utilisation of these funds.
What This Means for Industry
Manufacturers dealing in specified goods should closely monitor upcoming notifications regarding:
- The effective date of implementation
- Detailed rate schedules and compliance procedures
Early preparedness will be crucial to ensure smooth compliance once the cess becomes operational.