Excise Duty in India

Excise Duty is a tax levied on the goods manufactured in the country. It is a form of Indirect Tax that is collected by the seller or the intermediary from their consumers and is then paid to the government. The Central Board of Indirect Taxes and Customs (CBIC), functioning under the leadership of the Finance Minister, is the national authority responsible for collecting it.

After the introduction of Goods and Service Tax (GST) in India, almost all the indirect taxes have been subsumed into one tax, that is, GST. Hence, excise duty technically does not exist in India anymore except on few items like liquor and petroleum.

Acts and Rules

Majorly, there are two acts governing the legal framework of Excise Duty:

  • Central Excise Act, 1944: This Act provides all the definitions related to Excise.
  • Central Excise Tariff Act, 1985: The Act defines the rate of the Central Excise Duty and the elaborate schedule of excisable goods.

Types of Excise Duty

The following are the three types of Excise Duty in India:

  1. Basic Excise Duty: The duty imposed on goods classified under the first schedule of the Central Excise Tariff Act, 1985 and under Section 3(1)(a) of the Central Excise Act, 1944. It is levied on all excisable goods in India except Salt.
  2. Additional Excise Duty: This tax levied on few specific goods as a substitute for the sales tax and is charged by the central and state government. Furthermore, it is imposed under Schedule 1 of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978.
  3. Special Excise Duty: This is imposed on special goods under the 2nd Schedule of the Central Excise Tariff Act, 1985.

When is Excise Duty paid?

Rule 4 of the Central Excise (Amendment) Act, 2002 implies that this tax should be levied on manufactured goods and must be paid when the goods in reference are ‘removed’. Moreover, it also says that the removal of goods for sale is not a taxable event but the production of such goods is.

Additionally, rule 8 of the Central Excise (Amendment) Act, 2002 says that the tax must be paid on the 5th of the following month after the goods are removed from the factory or warehouse for sale. Although, if this payment is made through Netbanking, then the deadline is the 6th of the following month. If the payment is for the month of March, it can be made by the 31st.

Who is liable to pay Excise Duty?

As we have already established, excise duty is levied on manufactured goods in the country therefore, the producer of such goods is liable to pay the tax to the government. The following three parties are responsible to pay:

  • The establishment that produced the goods
  • The party that got the goods manufactured by hiring labor
  • The entity that got the goods manufactured by other parties

How to pay Excise Duty?

The payment of the tax can be made through Netbanking by using the official CBIC payment gateway called Electronic Accounting System in Excise and Service Tax (EASIEST).

You can follow the following steps to make the payment through EASIEST:

  1. Visit the NSDL-EASIEST website

    Select option “E-payment (Excise and Service Tax)

  2. Enter the 15 digit Assessee Code allotted by jurisdictional Commissionerate

    Then, validate the Assessee code

  3. Verify the Assessee details as present in the Assessee Code Master

    The type of tax will be automatically selected on the basis of the Assessee Code.

  4. Select the type of duty/ tax to be paid

    Click on the button “Select Accounting Codes for Excise

  5. Select Accounting Codes

    At a time, the assessee can select up to six Accounting codes.

  6. Select appropriate Bank

    Once the data is validated in the NSDL central system, select the assessee’s choice of Bank from the drop-down button.

  7. Confirm the Data entered

    After that, you will be redirected to the Net banking site of the chosen Bank.

  8. Login to Net banking

    Next, make the payment at the Bank site and download the Challan as proof of payment.

  9. Confirm Payment status

    At last, Confirm the e-payment status of EASIEST (NSDL) website by clicking on “Challan Status Enquiry

Difference between Excise and Custom Duty

Excise Duty Custom Duty
  • It is levied on goods produced in India
  • Whereas custom duty is imposed on goods sold in India but were produced in a different country
  •  This is paid by the manufacturer and not the consumer
  • On the other hand, custom duty is paid by the importer of goods

FAQs

What are the consequences of evading Excise Duty?

According to the law, non-payment of duty can lead to a penalty of 25% to 50% of the tax evaded. This would be a substantial amount as the duty itself is a big amount.

Is duty levied by the state government?

No, it is imposed by the Central government except on goods such as narcotics and alcohol.

What are the types of Excise Duties in India?

There are mainly three types: Basic, Special and Additional.

Got Questions? Ask Away!

  1. Hey @HarshitShah

    Goods/sectors that are out of the GST ambit include alcohol and specified petroleum products like petroleum crude, high-speed diesel, motor spirit, aviation turbine fuel and natural gas. Alcohol for human consumption continues to attract state excise duty and VAT. Tobacco and tobacco-based products attract both excise duty and GST. Taxes such as stamp duty, toll tax, road tax, electricity duty etc. are not part of GST.

    Hope this helps!

  2. Hey @HarishMehta

    Customs duty and cess as applicable along with IGST+ GST compensation cess. IGST and GST compensation cess shall be paid after adding all customs duty and customs cess to the value of imports.

    Hope this helps!

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