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New Health Cess: Tax Based on Machine Speed, Not Output, From Feb 2026

The Finance Ministry has clarified the implementation of the Health Security and National Security Cess, effective February 1, 2026. The levy will be calculated monthly based on the installed capacity and maximum speed of packing machines, not on actual production output. The rules mandate factory CCTV surveillance and allow for cess abatement if machines are sealed and non-operational for over 15 days. Registration is required for each factory, with applications deemed approved if tax officers do not respond within seven working days.

Key Points: Health Security Cess: Tax on Machine Speed, Not Output | Feb 2026

  • Tax based on machine speed, not output
  • Mandatory CCTV surveillance in factories
  • Abatement for non-operational machines
  • Deemed approval if no official response in 7 days
2 min read

Machine speed, not output, to decide Health Security se National Security Cess: Finance Ministry

Finance Ministry clarifies new Health Security Cess. Tax levied monthly based on installed machine speed, not production. Rules include CCTV surveillance & abatement.

"The cess will be levied... based on the number of packing machines installed and their maximum rated speed, rather than actual production. - Ministry of Finance"

New Delhi, January 2

The Ministry of Finance on Friday released a comprehensive set of Frequently Asked Questions clarifying the implementation of the Health Security se National Security Cess Act, 2026, and the accompanying HSNS Cess Rules, 2026, which will come into force from February 1.

According to the FAQs clarification, all taxable persons covered under the Act, including manufacturers of specified goods such as pan masala, are required to register under the new regime through the ACES portal.

"The cess will be levied on a monthly basis and calculated based on the number of packing machines installed and their maximum rated speed, rather than actual production," said FAQs released by the Ministry of Finance.

Manufacturers adding new machines mid-month will be required to pay the full monthly cess for those machines, while new units starting operations during the month will be charged on a pro rata basis.

Registration applications must be filed in Form HSNS REG-01, and separate registrations will be required for each factory where machines are installed, according to the Ministry of Finance.

The FAQs state that existing manufacturers must apply for registration immediately upon the Act's commencement on February 1, 2026. In cases where tax officers do not respond within seven working days, registrations will be deemed approved, allowing manufacturers to continue operations without disruption.

The Ministry further outlined provisions for abatement, allowing manufacturers to claim adjustment of cess if machines remain non-operational for a continuous period of 15 days or more, subject to prior intimation and official sealing of machines by authorities.

In addition, mandatory surveillance measures have been introduced, requiring factories to install CCTV systems covering all machines and manual units, with footage to be preserved for 24 months and shared with authorities on request.

The Union Government has notified the Health Security and National Security Cess Rules, 2026, which provide the legal framework for the levy, collection, assessment, and administration of the cess introduced under the Finance Act, 2025.

- ANI

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Reader Comments

P
Priyanka N
While the intent for health security is good, the compliance burden seems high for small manufacturers. Separate registration for each factory, CCTV installation, and data preservation for 24 months will increase operational costs significantly. Hope there is some support for MSMEs.
A
Aman W
Finally, a strong policy targeting harmful products! Pan masala and similar goods are a major public health concern. The cess revenue should be strictly earmarked for healthcare infrastructure and anti-tobacco campaigns. Jai Hind!
S
Sarah B
Interesting approach. Taxing potential capacity rather than actual production is common in environmental regulations abroad. The 'deemed approval' in 7 days is a good provision to avoid bureaucratic delays. The key will be fair implementation.
V
Vikram M
The abatement rule for non-operational machines is practical. But paying full monthly cess for a machine added mid-month? That seems harsh. Should be pro-rata from the date of installation to encourage modernization and expansion.
K
Kavya N
Good to see the government using fiscal tools to address public health. However, the success depends on how well the surveillance is monitored. We don't want another system that exists only on paper. Transparency in how the collected cess is used is equally important.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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