What Is Meant By Excise Duty?


An excise duty is a type of indirect tax that is levied on the sales of particular goods. This tax is not paid directly by the customer but is passed on to the consumer by a merchant or producer of goods as a part of the price of the product.

What is the difference between sales tax and excise duty?

Excise duty is on the production of goods whereas sales tax is levied on sale of goods. Excise duty is paid by the manufacturer while the burden of sales tax is borne by the end consumer. … Excise duty is levied on accessible value whereas Sales tax is based on sale price.

What is the difference between customs and excise duty?

Main difference between custom duty and excise duty can be defined as below: The duty which is levied on the goods which are manufactured in the country is called excise duty whereas the duty which is levied on the goods which are imported from a foreign country is called as custom duty.

On which products excise duty is applicable?

However, the Goods and Services Tax (GST), introduction in July 2017, subsumed many types of excise duty. Today, excise duty applies only on petroleum and liquor. Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.

What are the different types of excise duty?

Here are the different types of excise duties:

  • Basic Excise Duty: Basic Excise Duty is levied under Section 3 of the Central Excises and Salt Act, 1944. …
  • Special Excise Duty: Central Excise Duty is charged under Section 37 of the Finance Act, 1978. …
  • Education Cess on Excise Duty: According to Section 93 of Finance (No.

What are the features of excise duty?

The following features of the excise duty:

  • Imposition.
  • Nature.
  • Basis of Taxation.
  • Payment.
  • Scope.
  • Maintenance of Records.
  • Excise rate.
  • Administration.

What are the objectives of excise duty?

Types of Excise Duty:-

Its objective is to generate additional revenue for some specified object. It is applicable at the rates specified in schedule second to Central Excise Tariff Act, 1985.

What are the basic condition for excise duty?

1) There must be goods. 2) The goods must be excisable. 3) Excisable goods must be manufactured or produced in India.

What are the two types of excise tax?


  • Specific Tax – refers to the excise tax imposed which is based on weight or volume capacity or any other physical unit of measurement.
  • Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles.

What is an example of an excise tax?

Excise taxes are internal taxes that are levied on the sale of specific goods and services, such as alcohol, fuel and tobacco. … For example, the excise tax on a vehicle is a percentage of the total cost while the excise tax on a tobacco and gasoline is a fixed amount.

Who is responsible for paying excise duty?

Excise duties may be paid by: the person or business who is the authorised warehouse-keeper of the place where excise products are produced, processed, stored, dispatched or received.

What is the function of excise department?

The primary function of the organization is to collect Goods and Services Tax & Central Excise duty. Besides, other taxes like National Calamity Contingent Duty, different kinds of Cess, Additional duty of Excise, are also collected for the exchequer.


Is excise duty a direct tax?

The Union Government levies direct taxes such as personal income tax and corporate tax, and indirect taxes like custom duties, excise duties and central sales tax.

What is the importance of central excise duty?

Central excise duty is an indirect tax, i.e. each person, rich or poor, is liable to pay tax indirectly on purchase of goods which have already been charged to duty. This tax is administered under the authority of Entry 84 of Union List of the Seventh Schedule read with Article 226 of the Constitution of India.

What is difference between excise duty and GST?

Excise duty is levied on the manufacture of goods and levied at the time of removal of goods. While GST will be levied on the supply of goods and services. In GST, Excise duty’s place has been taken by Central GST as excise is levied by Central Government and revenue from CGST will also be of Central government.

How is excise duty calculated?

Divide the total market revenue by the total number of excise goods sold during the period – this will give you the average tax base of the goods. Multiply the figure at step 4 by the appropriate tax rate to calculate the notional excise tax on the price.

Is VAT payable on excise duty?

VAT. VAT is payable based on the value of the goods imported, including any customs or excise duty that is due. This means that when paying VAT on excise goods, the trader pays VAT on the excise duty as well as VAT on the cost of the goods. … The standard rate VAT is 20%.

How excise duty is calculated Kenya?

How is car duty calculated in Kenya? … Excise Duty is 20% of the CRSP + Import Duty. 16% of the CRSP + Import Duty + Excise Duty is VAT. 2.25% of the CRSP is the IDF Fee.

Are clothes excise tax?

Whereas sales tax applies to just about everything you buy (usually with specific exceptions such as unprepared food and clothing), excise taxes are applied to specific goods. The most common examples are luxury goods or those that have been linked to specific health issues like cigarettes, alcohol and tanning salons.

What is the purpose of imposing excise tax?

As these examples suggest, one of the typical reasons for excise taxes is to discourage consumption of the good (i.e., so-called ʺsin taxes. “). Excise taxes are indirect taxes imposed upon the production or sale of particular commodities or related groups of commodities.

What kind of tax is VAT?

A value-added tax (VAT) is a flat tax levied on an item. It is similar in some respects to a sales tax, except that with a sales tax, the full amount owed to the government is paid by the consumer at the point of sale. With a VAT, portions of the tax amount are paid by different parties to a transaction.

What are 3 types of taxes?

Tax systems in the U.S. fall into three main categories: Regressive, proportional, and progressive. Two of these systems impact high- and low-income earners differently. Regressive taxes have a greater impact on lower-income individuals than the wealthy.

What are the 4 types of tax?

In fact, when every tax is tallied – federal, state and local income tax (corporate and individual); property tax; Social Security tax; sales tax; excise tax; and others – Americans spend 29.2 percent of our income in taxes each year.