Parliament clears bill to levy cess on pan masala manufacturing units: All you need to know

Parliament on Monday approved a bill aimed at imposing a cess on pan masala manufacturing units to generate additional resources for national security and public health. The Rajya Sabha returned the Health Security and National Security Cess Bill, 2025, to the Lok Sabha, which had already passed the legislation on December 5. Under the Bill, a Health and National Security Cess will be imposed over and above the Goods and Services Tax on pan masala manufacturing units. The levy will be based on the production capacity of machines installed in factories. At present, pan masala, tobacco and related products attract 28 per cent GST along with a compensation cess at varying rates. With the compensation cess coming to an end, the GST rate will rise to 40 per cent. In addition, excise duty will continue to apply on tobacco products, while the new cess will specifically target pan masala.