Rajya Sabha takes up Bill to levy cess on pan masala units

New Delhi, Dec 8 (PTI) The Health Security se National Security Cess Bill 2025 was taken up in the Rajya Sabha on Monday, with Finance Minister Nirmala Sitharaman saying it intends to create a "dedicated resource stream" for two domains of national importance -- health security and national security.

Opposition MPs, however, questioned the Bill's title being a mix of Hindi and English words, and also demanded that the Bill be sent to a parliamentary panel for further scrutiny.

Moving the Bill in the Rajya Sabha, Sitharaman said the cess won't be imposed on essential commodities.

"The purpose of this Bill is to create a predictable, dedicated resource stream for two domains of national importance -- one is health security, given the significant public health burden generally, as well as that which specifically arises from consumption of demerit goods like pan masala, and national security which requires a sustained investment to keep pace with evolving national security needs," Sitharaman said.

"It is not on essential commodities, and does not envisage any future when it may have to be placed on an essential commodity... This tax or cess, is to be a deterrent to those who tend to use these demerit goods, and it certainly doesn't burden ordinary citizens and their essential daily consumption," she said.

She also clarified that it does not impact the GST regime.

"The cess is linked to the capacity of packing machines... grammage of products, thus providing transparent predictable assessment basis.

"Intention is that this levy shall capture the production potential of the unit... The levy is not on actual production, but production capacity," she said.

Speaking on the Bill, Congress MP Shaktisingh Gohil asked why the title of the Bill used both Hindi and English, and said the Bill was listed late and members did not get enough time to go through it to move amendments.

He demanded that the Bill should be sent to a Parliamentary panel for further scrutiny, and also questioned why the government spent money on the construction of a new Parliament when they are being forced to impose a cess for national security.

"You have brought this Bill, and you say you need money for national security... regular tax is not enough, so you want to impose cess. When you don't have money for national security, what right did you have to waste money on constructing a new Parliament building?" Gohil said.

"Why is a new office being made for the prime minister. We don't have this right. What are our priorities? Was the new building more important than national security and health security?" he said.

He also questioned why the government is not banning 'pan masala' as many are impacted by it.

"We should also see the list of how many gutkha manufacturers donated money under electoral bonds... School going children are getting addicted to it," he said.

Trinamool Congress MP Saket Gokhale also questioned the Bill's title, and said, "Earlier you named bills in Hindi, then English, now Hinglish... If you want to be inclusive, maybe since Bengal elections are coming, bring a Bill named in Bangla... we will also celebrate it".

He said the Bill is attacking federalism, as states do not get any share in cess.

"In this bill there is no mention of any health security or national security measure on which this money is going to be spent," he said.

He also said Section 34 of the Bill says the government can decide to put anything in the list of specified items. "Who says it can't be an essential good, or a demerit good, the Bill doesn''t specify that".

"Clause 6 empowers the central government to double the cess by citing public interest. The power of taxation is purely and solely the domain of Parliament. Through this bill, the government is giving itself the power to double the tax rate without putting it to Parliamentary review, this is absolute mockery of Parliament," he said.

He also mentioned West Bengal's flagship health assurance programme providing cashless healthcare -- Swasthya Sathi -- and said the middle class is also covered under the scheme unlike the centre's Ayushman Bharat.

Gokhale also mentioned the Pahalgam terror attack, stating that it reflects the situation of national security.

Deputy Chairman Harivansh objected to it and urged him to stick to the subject of the Bill, and said Gokhale's remarks would not go on record.

The TMC MP argued that the term "national security" is there in the Bill's title, following which there was a brief ruckus in the House.

A point of order was raised by TMC leader in the Rajya Sabha Derek O'Brien, who also pointed to the title of the Bill having the term 'national security'.

DMK MP Kanimozhi NVN Somu also raised objection to the title of the Bill.

"The Bill, the way it has been named, is a controversy. Why the word 'se'? It means from, to, then, by, through? It is not appropriate for a formal legislation to text it in such a way," she said.

She questioned why the government is not banning pan masala and similar products.

"The government says it will use proceeds from the cess on tobacco and the pan masala to boost health and national security. Will they really spend the proceeds to boost health and national security is a million dollar question because unfortunately for the people of the country, the quantum of unused cess and surcharge funds amounting to Rs 6 lakh crore since 2019 has been lying underused," the DMK MP added.

She questioned if the Bill would uphold federal spirit or "quietly erode the federal balance", and said Tamil Nadu has faced multiple instances of fiscal discrimination and administrative neglect with the NDA in the Centre.

The Bill, which proposes Health and National Security Cess to be levied on pan masala manufacturing units, was passed by the Lok Sabha on Friday. PTI AO TRB