New cess revenue to be shared with states: FM

Revenue from the proposed Health Security se National Security Cess Bill, 2025 will be shared with states for spending on health-related schemes, Finance Minister (FM) Nirmala Sitharaman said on Thursday while moving the Bill for discussion in the Lok Sabha.

- MONIKA YADAV

The minister clarified that the proposed levy is a cess on demerit goods, and not on any essential commodity. She said the first objective is to curb health risks arising from the consumption of products such as pan masala, whose harmful effects are well-documented. “By imposing this cess and increasing the price of pan masala, we believe consumption will reduce. It is meant to work as a deterrent,” she said.

The second objective relates to national security, which requires sustained investment. The cess is, therefore, designed to fund critical national priorities without burdening ordinary citizens on essential consumption. She emphasised that although cess revenues are normally retained by the Centre, in this case the revenue will be shared with states through a health-related scheme, allowing them to use it for awareness-building and similar programmes. “This is a tax in the form of cess, but we intend to give a share to the states through schemes tied to health,” Sitharaman said.