Quick Answer: What Is Excise Duty And When It Is Applicable?

What is excise duty how it is calculated?

Excise Duty is applied to goods such as cigarettes and alcohol.

It is added in addition to the normal Duty and Tax charges.

Excise duty is calculated from the weight or volume of the goods rather than its value..

What are the objectives of excise duty?

Enforcement and Monitoring of Excise Policy matters. Collection of Excise levies on liquor including dues. Issue of Licenses for production of Spirit and Liquor, to Breweries for production of Beer other alcohol based produces. Issue of Licenses for bottling of Wine, Beer and Indian Made Foreign Liquor (IMFL).

What do you understand by excise duty?

Excise duty is a form of tax imposed on goods for their production, licensing and sale. … 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.

Is excise duty an operating expense?

Excise duty should be considered as a manufacturing expense and like other manufacturing expenses be considered as an element of cost for inventory valuation. … Excise duty cannot be treated as a period cost.

Is VAT calculated on excise duty?

The assessable value for VAT is INR 21,000. The taxes applicable on the transaction are as follows: Basic Excise Duty (BED) is 16% on Assessable value for excise….Example: Excise duty.LayerThe amount or tax represented by the layerTax64 per cent of (20000 + 3200)928.0074 per cent of (20000 + 3200)928.008 more rows

What is an example of an excise tax?

Excise taxes are most often levied upon cigarettes, alcohol, gasoline and gambling. These are often considered superfluous or unnecessary goods and services. To raise taxes on them is to raise their price and to reduce the amount they are used. In this context, excise taxes are sometimes known as “sin taxes.”

Why is excise duty deducted from sales?

Excise duty charged on Sales not considered at Sales according to accouting principle. Because, excise duty amount is liability amount, we need to pay to government on due date and it is balance item.

What is the difference between excise duty and customs duty?

While excise duty is levied on goods produced or manufactured within the country, custom duty applies to the goods that are sold in India but were produced in a different country. Excise duty is to be paid by the manufacturer of the goods and not by the consumer. Custom duty is to be paid by the importer of the goods.

What are the types of excise duty?

Types of Excise DutyBasic 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.More items…

What is basic customs duty?

Basic Duty is a type of duty or tax imposed under the Customs Act (1962). Basic Customs Duty varies for different items from 5% to 40%. … Additional duty also known as countervailing duty or C.V.D is equal to excise duty imposed on a like product manufactured or produced in India.

Who is liable to pay excise?

The liability to pay tax excise duty is always on the manufacturer or producer of goods. There are three types of parties who can be considered as manufacturers: Those who personally manufacture the goods in question. Those who get the goods manufactured by employing hired labour.

What is special excise duty?

Special – According to Section 37 of the Finance Act, 1978, Special Excise Duty is levied on all excisable goods that come under taxation, in line with the Basic Excise Duty under the Central Excises and Salt Act of 1944.