Archive · 5 Dec 2025
Parliament Approves Health, Security Cess on Tobacco, Pan Masala
The Indian Parliament has approved two bills to increase taxes on tobacco and pan masala.
The first bill raises excise duty on tobacco products, making them more expensive.
The second bill introduces a new cess on pan masala based on the production capacity of factories.
The extra money collected will be shared with the states for health schemes.
The government says this will not harm tobacco farmers or beedi workers, as there are schemes to help them.
The bills aim to make these products less affordable and follow guidelines from the World Health Organization.
The tax on cigarettes in India is currently 53% of the retail price, which is lower than the WHO's recommended 75%.
Karnataka's Chief Minister has urged the Prime Minister to compensate states for revenue loss due to GST rate rationalisation, warning that it poses a serious threat to state finances.
The Finance Minister has assured that the proceeds will be used for public health and national defence, emphasizing the need for advanced technology in modern warfare.
Parliament approved the Health and National Security Cess Bill, 2025 and the Central Excise (Amendment) Bill, 2025 to raise excise duty on tobacco and impose a cess on pan masala.
The cess will be levied on the production capacity of pan masala factories and will not affect GST collections.
Revenue from the cess will be shared with states for health-related schemes and awareness programs.
Excise duty on tobacco products will range from 60–70% on unmanufactured tobacco to ₹2,700–₹4,500 per 1,000 sticks on cigarettes.
The government assures that tobacco farmers and beedi workers will not be harmed, with support schemes in place.
Karnataka Chief Minister Siddaramaiah urged Prime Minister Modi to compensate states for revenue loss due to GST rate rationalisation, warning of a serious threat to state finances.
Finance Minister Nirmala Sitharaman emphasized the need for resources to strengthen national defence and public health, highlighting the capital-intensive nature of modern warfare.
- Who
- Parliament (Lok Sabha and Rajya Sabha), Karnataka Chief Minister Siddaramaiah, Finance Minister Nirmala Sitharaman
- What
- Approval of the Health and National Security Cess Bill, 2025 and Central Excise (Amendment) Bill, 2025 to raise excise duty on tobacco and related products and impose cess on pan masala
- When
- Passed on Thursday in Rajya Sabha and Wednesday in Lok Sabha
- Where
- India
- Why
- To increase tax incidence on tobacco products, create a dedicated resource stream for health and national security, and align with public health goals
- Bill Name
- Health and National Security Cess Bill, 2025
- Passed By
- Parliament (Lok Sabha and Rajya Sabha)
- Impact on States
- Revenue shared with states for health schemes
- Tobacco Farmers
- Support schemes for crop diversification
- Beedi Workers
- 49.82 lakh registered workers; labour welfare schemes
- GST Compensation
- States compensated if revenue falls below assured level
- WHO Benchmark
- India's tax incidence on cigarettes is 53% of retail price, below WHO's 75% benchmark
- Cess on Pan Masala
- Based on production capacity of machines
- Excise Duty on Tobacco
- 60–70% on unmanufactured tobacco, ₹2,700–₹4,500 per 1,000 sticks on cigarettes
- GST Revenue Loss
- States face potential revenue loss of 15-20% due to GST rate rationalisation
- Defence Spending
- Proceeds to be used for public health and national defence
Sources
Parliament Approves Bill To Raise Excise Duty On Tobacco
Sitharaman Says The New Cess Will Target Only ‘Demerit Goods’, Revenue To Aid Health Schemes
Demerit Goods to Face Health, Security Cess: Nirmala Sitharaman
National security cess not on essential goods, says FM Nirmala Sitharaman
Duty on tobacco tool to protect health, says NDA; will hurt poor the most: Opposition
Row over ‘Hinglish’ bill title as Opposition protests Nirmala Sitharaman’s pan masala cess move - Telegraph India
Health & Security Cess excludes essentials
Parliament Winter Session LIVE: Lok Sabha To Take Up Health, National Security Cess Bill For Further Consideration, Passing
Parliament Winter Session Day 5: Discussion on Health, National Security Cess Bill; govt business for next week
Sitharaman to table Health & National Security Cess Bill in Lok Sabha, pan masala to face 40% levy
Tobacco sector ‘highly evasion-prone’, even 40% GST not enough: FM defends cess
Lok Sabha passes Health and National Security Cess Bill, 2025 to fund public health and security initiatives
Lok Sabha clears ‘Health Security se National Security Cess Bill’, proposing cess on pan masala companies
We can’t afford to leave our forces underprepared: Sitharaman defends Cess Bill
Tech driven modern warfare not cheap, says FM Sitharaman
Pan Masala Cess Bill Passed; Funds Earmarked for National Security and Public Health
Lok Sabha Passes Bill To Levy Cess On Pan Masala Manufacturing Units
Govt moves to nix any pan masala cess-dodging tactics
‘Need to raise resources to buffer defence requirements’: Lok Sabha passed Health Security se National Security Cess Bill
