Table of Contents
Introduction
Excise duty has been integral to India’s tax framework since colonial times, serving to regulate trade and generate revenue. Despite modernizations like the Goods and Services Tax (GST), it remains relevant, particularly for commodities such as alcohol, tobacco, and petroleum products. This article delves into its intricacies, tracing its historical evolution, contemporary implications, and enduring significance in India’s taxation landscape.
Understanding Excise Duty:
Excise duty is an indirect tax imposed on the manufacture, production, or sale of specific goods within a country. Targeting items deemed harmful, luxurious, or commercially valuable, it is levied at the point of production or manufacture and embedded in the product’s price, ultimately borne by the end consumer.
Evolution Over The Time:
India’s taxation journey dates back to colonial rule when it was introduced by the British East India Company to finance administration and expand trade. Post-independence, India revamped its taxation structure to align with domestic needs and economic policies. The Central Excise Act of 1944 regulated taxes on domestically manufactured goods. The advent of GST in 2017 absorbed several indirect taxes, including excise duty, into a unified tax system, while certain goods retained exceptions.
Excise Duty Filing and Compliance
- Registration
- Businesses liable for this tax must register under the Central Excise Act, 1944.
- A registration certificate is issued by the CBIC.
- Payment of Duty
- The duty is paid before goods leave the manufacturing unit.
- Payment is made through the CBIC online portal or authorized banks.
- Duty Return Filing (ER-1 Form)
- Registered manufacturers must file monthly returns detailing production and payments.
- Returns must be submitted electronically via the CBIC-GST portal
Impact of GST on Excise Duty
With GST replacing multiple indirect taxes, excise duty is now limited to specific goods. The introduction of GST has:
- Reduced multiple taxation layers
- Simplified tax compliance for businesses
- Eliminated on most manufactured goods
Conclusion
Excise duty continues to be a cornerstone of India’s indirect tax system, reflecting governmental efforts to regulate trade, support welfare, and raise revenue. As India evolves its tax structure, this tax persists, impacting industry, consumers, and the economy. Understanding its nuances is crucial for businesses, policymakers, and stakeholders to navigate India’s taxation landscape and foster sustainable growth.
Disclaimer: The views expressed here are of the author and do not reflect those of Dhanvantree. Mutual funds are subject to market risks, please read the scheme documents carefully before investing.