Excise duty

Excise, often known as excise tax or excise duty, is a sort of tax levied on items produced within the country (as opposed to customs duties, charged on goods from outside the country). It is a tax imposed on the manufacture or sale of a product. The Central Value Added Tax is the new name for this tax (CENVAT).

EXCISE DUTY: WHAT IS IT?

Excise duty is a type of tax levied on products for their manufacture, distribution, and sale. Excise duty is an indirect tax paid to the Indian government by manufacturers of commodities. It is the polar opposite of Customs duty in that it applies to items created domestically in India, whereas Customs applies to goods imported from outside the nation.

Previously, the excise tax was imposed at the federal level as Central Excise Duty, Additional Excise Duty, and so forth. However, the Goods and Services Tax (GST), which went into effect in July 2017, absorbed a wide range of excise taxes. Excise tax is currently exclusively applied to gasoline and alcoholic beverages.

Excise duty Types

The following are the three main types of central excise charges that exist in India:

Basic Excise Duty is imposed under Section 3 of the Central Excises and Salt Act, 1944. All excisable items made or produced in India, except for salt, are liable to Basic Excise Duty under this clause. The Central Excise Tariff Act specifies the rates at which the Central Value Added Tax, or CENVAT, is levied.

Central Excise Duty is imposed according to Section 37 of the Finance Act of 1978. Under Section 3 of the Central Excises and Salt Act, 1944, it is imposed on all excisable items that are subject to Basic Excise Duty. The Second Schedule to the Central Excise Tariff Act, 1985, specifies the rate at which Special Excise Duty is levied.

Excise Cess on Excise Duty: Education Cess is an excise duty that must be computed on the aggregate of all excise duties, including special excise duty or other excise duties, but not including Education Cess on excisable goods, according to Section 93 of the Finance (No. 2) Act, 2004.

What is the difference between Excise and Customs Duty?

While excise duty is imposed on items produced or manufactured within the nation, custom duty is imposed on goods sold in India but made outside. The maker of the products, not the purchaser, is responsible for paying the excise charge. The importer of the goods is responsible for paying the customs charge.

GST vs. Excise Duty: What’s the Difference?

The following are the primary distinctions between the GST and the Excise Duty:

Excise duty is collected on product manufacturing, while GST is charged at every level of the supply chain, from product manufacture to product sale.

Excise duty is levied when things are removed from the market, whereas GST is charged when products and services are supplied.

Tax rate: The rates for excise duty are determined by the central excise tariff rules. Excise tax is now imposed at 12.36 per cent, however, it fluctuates depending on the kind of goods. GST, on the other hand, has standard rates of 0%, 5%, 12%, 18%, and 28%, depending on the kind of goods.

Return filing: Excise duty returns must be made every month, and an annual return must be filed by April 30. Returns must be filed every month under GST, with an annual return due by September 30.

There is no idea of invoice matching under excise duty, and the taxpayer can claim an input tax credit based on self-assessed reports. Under GST, credit can be availed based on invoice number matching.

Credit can be obtained under GST if the invoice number matches.

When it comes to the input tax credit, credit under excise duty can be used to offset the tax imposed on input products and services. Credit can be claimed under GST as well, although SGST credit cannot be used to offset CGST credit and vice versa. IGST credit, on the other hand, can be used for SGST, CGST, or IGST.

Conclusion

Excise, often known as excise tax or excise duty, is a sort of tax levied on items manufactured in the country (as opposed to customs duties, charged on goods from outside the country). It’s a levy imposed on the manufacture or sale of a product. The Central Value Added Tax has replaced this tax (CENVAT). Unless otherwise specified, duty must be paid on all produced items.