Health Security se National Security Cess Act, 2025: Operational Impact from 1 February 2026

The Central Government has now operationalised the new capacity-based cess regime under the Health Security se National Security Cess Act, 2025 by issuing Notification S.O. 6153(E) dated 31st December, 2025. Acting under the enabling provision in section 1(2), the Government has appointed 1st February, 2026 as the date on which the Act comes into legal force.

From this appointed date, the Act ceases to be only a legislative framework on paper and becomes an enforceable fiscal statute, with direct implications for manufacturers and processors of “specified goods” covered under Schedule I.

Effective date: All substantive and procedural provisions of the Health Security se National Security Cess Act, 2025 apply from 1st February, 2026, as per Notification S.O. 6153(E).

The legislation creates a machine-based and process-based cess regime that focuses on manufacturing capacity and technical parameters, rather than on actual output cleared. The funds so collected are earmarked to strengthen expenditure on national security and public health, subject to Parliamentary control.

Legislative Context and Policy Objective

The Health Security se National Security Cess Act, 2025 (Act No. 35 of 2025) received Presidential assent on 15th December, 2025 and was published by the Ministry of Law and Justice (Legislative Department) on 16th December, 2025.

The preamble clearly states that the Act is intended:

  • “to augment the resources for meeting expenditure on national security and for public health, and to levey a cess for the said purposes on the machines installed or other processes undertaken by which specified goods are manufactured or produced and for matters connected therewith or incidental thereto.”

Key policy features emerging from this framework are:

  • A dedicated cess (section 4) targeted at certain capacity-linked activities in relation to specified goods.
  • A clear linkage between levy and machines/processes, not actual production quantity.
  • A ring-fenced objective, with proceeds to be deployed for national security and public health under section 7, subject to Parliamentary appropriation.

Statutory Trigger under Section 1(2)

Section 1(2) provides that the Act will commence on such date as notified by the Central Government in the Official Gazette. In exercise of this power, the Government has:

  • Issued Notification S.O. 6153(E).
  • Fixed 1st February, 2026 as the appointed date.

Practical Consequences from 1 February 2026

From 1st February, 2026 onwards:

  • The cess becomes leviable and collectible under section 4 from every “taxable person” (section 3).
  • Registration, declaration, payment and return obligations become immediately applicable.
  • Enforcement, audit, inspection, penalty and prosecution provisions are fully operative.
  • Assessees in the relevant sectors must ensure that machines, processes, and technical parameters are correctly declared and aligned with the statutory scheme.

Key Definitions and Coverage

Chapter I (section 2) lays down important definitions that determine the scope and operation of the cess.