Must Knows

What is excise duty?

[ecis2016.org] Excise duty is a central tax imposed on the production, licensing and sale of goods. It has been largely subsumed by the GST but is still applicable on alcohol and petroleum.

Excise duty is an indirect tax imposed by the central government on the production, licensing and sale of goods. Barring a few goods on which excise duty is levied by central and state governments, excise duty was subsumed by the Goods and Services Tax (GST) in 2017.

Unlike the GST, which is imposed at the time of supply of goods, excise duty is imposed at the time of removal of goods, from the warehouse or the factory, for sale.

Excise duty is replaced specifically by the central goods and services tax (CGST).

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Excise duty: Overview

Imposed by Central government
Imposed on Production, licensing and sale of goods
Other names Central Excise Duty, Additional Excise Duty
Type Indirect tax
Time of imposition During removal of goods from the warehouse or the factory for sale
Types of excise duties Basic excise duty

Additional excise duty

Special excise duty

Replaced by CGST
Still applicable on Alcohol, petroleum

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Excise duty vs customs duty

Even though the principle is similar, excise duty is imposed on goods produced in India while customs duty is imposed on goods exported into India.

Laws governing excise duty in India

  1. Central Excise Act, 1944: Defines excise duty rates
  2. Central Excise Tariff Act, 1985: Provides definitions

Applicability of excise duty post-2017

Since the launch of the GST, excise duty is only applicable to the production, licensing and sale of alcohol and petroleum in India.

Types of excise duty

There were three types of excise duty imposed in India.

Basic excise duty

Formally known as the Central Value Added Tax (CENVAT), this was applicable on all goods, barring salt, under Section 3 (1) (a) of the Central Excise Act, 1944.

Additional excise duty

Under the provisions of the Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957, additional excise duty was levied on some special categories of goods.

Special excise duty

Under the Second Schedule of the Central Excise Tariff Act, 1985, special excise duty was imposed on classified special goods.

FAQs

What is excise duty in simple words?

Excise duty is an indirect tax levied by the central government on the production, licencing and sale of goods.

What is the purpose of excise duty?

Excise duty is levied to generate revenue by taxing manufacturing, licensing and sale of goods.

What is the difference between excise duty and GST?

Excise duty is imposed at the time of removal of goods while GST is paid at the time of their supply.

Is excise duty levied by state governments?

Excise duty is levied by the central government. However, state governments also impose excise duty on alcohol and narcotics.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Debora Berti

Università degli Studi di Firenze, IT

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