Excise | Excise | Value Added Tax

Excise

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An excise or excise tax (sometimes called a duty of excise special tax) is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes. An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover or shift the tax by raising the price paid by the buyer. Excises are typically imposed in addition to another indirect tax such as a sales tax or value added tax(VAT). In common terminology (but not necessarily in law), an excise is distinguished from a sales tax or VAT in three ways: (i) an excise typically applies to a narrower range of products; (ii) an excise is typically heavier, accounting for a higher fraction of the retail price of the targeted products; and (iii) an excise is typically a per unit tax, costing a specific amount for a volume or unit of the item purchased, whereas a sales tax or VAT is an ad valorem tax and proportional to the price of the good. Typical examples of excise duties are taxes on gasoline and other fuels, and taxes on tobacco and alcohol (sometimes referred to as sin tax).

Tobacco, alcohol and gasoline
These are the three main targets of excise taxation in most countries around the world. They are everyday items of mass usage (even, arguably, "necessity") which bring huge profits for governments. The first two are considered to be legal drugs, which are a cause of many illnesses (e.g. lung cancer, cirrhosis of the liver), which are used by large swathes of the population, with tobacco being widely recognized as addictive. Gasoline (or petrol), as well as diesel and other fuels, meanwhile, despite being indispensable to modern life, have excise tax imposed on them mainly because they pollute the environment.

India
In India, almost all manufactured products are included for excise duty. In India, for getting excise tax, Govt. of India has made Automation of Central excise and service tax with this, manufacturer can easily pay their excise tax online on every 10th of following the month through ER -1.

MEANING OF "GOODS" Central Excise duty is levied on goods which are manufactured or produced. The understanding of term goods is of vide importance in determining the leviability of Excise Duty. The Act does not define the term "goods". The judgment of the Supreme Court in the case of Delhi Cloth and General Mills (supra) is considered to be the landmark judgment in this regard, where it is held that an ‘an article can be called "goods" if it is known to the market as such and can ordinarily come to the market for being bought and sold. Actual sale of the article is not important but it must be capable of being bought and sold’.

VALUATION

value The Central Government under section 4A of the Act can notify goods on which excise duty will be payable on the MRP less % of abatement. (B) M. CENVAT means. 4.2 The modes of valuation of goods under the Excise Act are: (A) Tariff value The Central Government is authorized under the provisions of section 3(2) of the Act. 1976. Such value shall be deemed to be the assessable value in such cases. VAT would. however.4. The provisions of this section are applicable to products which are statutorily required to put MRP under the Standards of Weight and Measures Act. Except in cases where specific duty has been provided for on the basis of certain unit like weight. to fix the ‘tariff value’ for any goods which may be different for different classes of goods. or any other law and in respect of which specific notification has been issued. This is also termed as the ‘notional value’. Thus for calculating the amount of duty payable.Central Value Added Tax CENVAT is the new name for MODVAT. CENVAT . as in case of goods like cigarettes (length basis). India already has a system of sales tax collection wherein the tax is collected at one point (first/last) from the transactions involving the sale of goods. These are related to central excise.e. Tax on Value Addition on the goods manufactured according to Central Excise & Customs Act . for goods that are imported and consumed in a particular state. cement clinkers (per ton basis). first the assessable value of the goods has to be determined under the provisions. Basically they are the same.Value Added Tax VAT is a sales tax collected by the government (of the state in which the final consumer is located) – which is the government of destination state on consumer expenditure. i. for most of the goods the rates are specified on an ad valorem basis. length.1 Introduction The levy of duty requires the valuation of the goods under consideration after establishing the duty liability and the classification of the goods.P. the first seller pays the first point tax.. Over 120 countries worldwide have introduced VAT over the past three decades and India is amongst the last few to introduce it. The duty in such cases is the % of such tariff value and not the Assessable Value.R. be collected in stages (instalments) from one stage to another. expressed as a percentage of value of goods. and the next seller pays tax only on the value-addition done – leading to a total tax burden exactly equal to the last point tax. etc. (C) Transaction value VAT. The mechanism of VAT is such that.

which converts the Input in to Output. and the GST will thus be implemented concurrently by the central and state governments [3] as the Central GST and the State GST respectively. Like this the discussion is goes on for definition. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments. and the output is newly recognised as per the this act as Exciseble goods. India is a federal republic. the decision on which is [2] pending. [1] . The Goods and Services Tax (GST) is a value added tax to be implemented in India. It is aimed at being comprehensive for most goods and services. Here the value addition means the Additional Services/Activities etc. Exports will be zero-rated and imports will be levied the same taxes as domestic goods and services adhering to the destination principle.Difinition.

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