Excise Duty

Subject – Economy

Context – Petroleum products: Excise collection 79% more than pre-Covid levels

Concept –

This is a duty on manufactured goods, which is levied at the time of manufacture.
A part of indirect tax, excise duty is a levy on particular goods and is collected at the point of manufacture, but ultimately, the burden is passed on to the consumer.
- The manufacturer, who pays the levy to the government, adds the tax component to the price of the goods to recover it from the eventual buyer of goods, who ends up paying the higher price.
Excise duty is the opposite of Customs duty in that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.

What is the difference between excise duty and GST?

Excise duty is imposed in addition to an indirect tax such as goods & services tax (GST), sales tax or value-added tax (VAT).
The difference between excise duty and other indirect taxes is that excise duty is levied on the manufacture of goods and at the time of removal of goods from the factory, while GST or sales tax or VAT are levied on the supply of goods and services.

How to claim the input tax credit?

Unlike GST, there is no such concept of invoice matching and a taxpayer may claim an input tax credit on the tax charged on the basis of a self-assessed return filed by him/her.

How much is the rate of excise duty?

The excise duty rates are specified according to central excise tariff rules, and currently, the rate of excise duty is 12.36 per cent, which varies according to the type of goods.

Who has the authority to impose excise duty in India?

Although excise duty in India is predominantly a central levy, the duty on production of some items like alcohol, alcoholic preparations, and narcotic substances is imposed and collected by state governments.
For most of these states, this is the second largest tax revenue after sales taxes/state VAT.
At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc.
- However, the Goods and Services Tax (GST), introduction in July 2017, subsumed many types of excise duty. Today, excise duty applies only on petroleum and liquor.
- After GST was introduced, excise duty was replaced by central GST because excise was levied by the central government. The revenue generated from CGST goes to the central government.

Controller General of Accounts (CGA)

The CGA is the Principal Accounting Adviser to the Government of India. The office is in the Department of Expenditure, Ministry of Finance, GOI.
The office of the CGA has the mandate to establish and maintain a technically sound Management Accounting system.
It also prepares and submits the accounts of the Central Government.
It is also in charge of the exchequer control and internal audits.

CGA vs CAG –

The CGA is not a constitutional body. But the CAG is a constitutional body.
Another difference between the CGA and the CAG is that the CAG is an independent body while the CGA is not. It is under the Department of Expenditure.
The President lays down general principles of government accounting on the CAG’s advice, the CGA performs the function of maintaining them.