Explaining Excise Duty: A Quick Guide

Excise duty is an indirect tax collected or imposed by the Indian federal government on the production, sale, or licensing of particular products. State governments also charge excise duty (tax) payments for the sale of narcotics and alcohol. Those having taxable income should familiarize themselves with the various taxes and levies in order to better comprehend the process of making tax payments and submitting returns. Learn more about excise duty in India, including the many forms of excise duties.

What is Excise Duty?

Excise duty refers to the taxes levied on domestically produced things as opposed to customs duties, which are paid on imported goods. Taxpayers should be aware that the GST now includes excise duty as one of the several indirect taxes it has subsumed or absorbed. This means that there is no excise duty in India, save for a few goods such as alcohol and petrol. The consumer does not pay excise duty to the government directly. Instead, the producer or merchant incorporates it into the cost of the goods, which is then passed on to the buyer in the form of higher costs. 

When Should You Pay Excise Duty?

Excise duty is placed on manufactured products and must be paid when the products are removed.' The Central Excise (Amendment) Rules, 2002 stress and highlight this fact. The Rule further states that the removal of products for sale is not taxable and is done only for convenience. When manufacturing or producing items, one must pay excise duty. According to Central Excise Rules 2002 - Rule 8, the excise tax is due on the fifth of the next month after the items are shipped from the warehouse or factory for sale. For online payments, this date is the sixth of the next month.

Types of Excise Duty

There are three primary forms of excise duty, including: 

Basic Excise Duty

According to Schedule 1 of the Central Excise Tariff Act 1985, this type of excise tax is levied on items. Except for salt, it is imposed or taxed on all excisable goods. 

Additional Excise Tax

This tax applies to all commodities specified in Section 3 of the Additional Duties of Excise Act 1957. This charge replaces the sales tax and is shared between the federal and state governments. 

Special Excise Duty

This form of tax applies to the products defined in Schedule 2 of the Central Excise Tariff Act of 1985. Remember that people are exempt from paying taxes. However, this benefit can only be used if:

• Revenue generated in a fiscal year.
• Raw materials used.
• Process involved. 

People who are unable to use these exemptions must pay their excise duty on time. 

Who Should Pay Excise Duty?

Excise duty must be paid to the government by the maker of the items since it is imposed on the manufacture or production of goods or commodities. According to the excise law, three parties are liable for paying the excise duty:

• The person or business that generated the contested things 
• The person or organization who hired workers to construct the items
• The person or entity that received third-party-produced items

Steps to Pay Excise Duty

According to the Central Excise Act, those who fail to pay their excise duty shall be fined as a penalty. The penalties is normally between 25% and 50% of the evaded tax amount. To avoid such a penalty, persons must pay the tax on time and ensure that the amount recorded on the tax return is accurate. CBEC's payment gateway is commonly referred to as the Electronic Accounting System in Excise and Service Tax (EASIEST). It simplifies the process of paying excise duty in a few steps. Here's how you utilize EASIEST to pay excise duty.

Step 1: Go to the EASIEST platform and select the ePayment option.

Step 2: Verify the applicant's assigned number online.

Step 3: Enter your name, address, and jurisdiction-related information.

Step 4: Select the tax type from the selection under Excise Codes.

Step 5: After selecting the accounting code, choose the financial or banking institution to pay the tax. 

Step 6: Before making a payment, double-check and validate all details. 

Step 7: Log in to the payment gateway with your net banking credentials.

Step 8: Enter the tax amount and account number. 

Step 9: After successful payment, the gateway will generate and issue a Challan Counterfoil, including the CIN. 

Step 10: Confirm successful payment status by clicking the Challan Status Inquiry option. 

Penalty for Not Paying Excise Duty

When excise tax is not paid or an offence involving an excisable product is committed, you will be required to pay more than Rs. 50 lakh in duty and/or serve up to 7 years in prison. Depending on the circumstances, the penalty could sometimes be up to three years and include a fine.Section 11A(4) defines deception, purposeful lie, cooperation, or concealing of facts as grounds for a penalty for failing to pay excise due insufficiently. The following are the penalties for the several excise duty-related offences: 

• Non-payment of excise duty owing to intentional misstatement, suppression of facts, or collision will result in a penalty equal to 50% of the duty for the taxpayer. 
• If a taxpayer pays interest and excise tax within 30 days, they will be punished by 25% of the duty.
• If an excise duty bill or invoice is generated and a goods removal claim is made despite the items not being delivered, the assessee must pay INR 5000 or the equal amount, whichever is higher. 

Conclusion

Several taxes were replaced with the complete implementation of GST. 

While excise duty is collected on items manufactured and removed from the market, GST is levied on goods and services supplied and distributed. India's central GST has replaced excise duty. This is because the central government levies the excise tax and collects the income earned by G