By:- Sagar Patil

12MT07IND016

TaxTax is nothing but money that people have to pay the

Government, which is used to provide public services.

A tax is legally compulsory payment levied by the government

on the persons or companies to meet the expenditure incurred

on conferring common benefits upon the people of a country.

In other words a tax can also be describe as a compulsory levy

where those who are taxed have to pay the sums irrespective of

any corresponding return of services or goods by the

government.

Types Of TaxesSome taxes are direct and others are indirect. Under our

constitution, while the Central Government is vested with the

powers of levy and collection of certain taxes, the State

Governments are empowered to levy and collect certain other

type of taxes.

Direct Tax

Income Tax

Entertainment Tax

Gift Tax

Wealth Tax

Indirect Tax Excise Duty

Customs Duty

Sales Tax

...Constitutional Framework

Union List State List Concurrent List

• Income Tax

• Custom Duty

• Excise Duty

• Corporation Tax

• Service tax

• Central Sales Tax

• Stamp duty in respect

of bills of exchange,

cheques, promissory

notes, etc

• Taxes on lands and

buildings

• Excise duty on

alcoholic liquor etc

• Entry tax

• Sales Tax

• Tolls

• Luxury Tax

• Stamp duty in respect

of documents other

than those specified in

the provisions of List I

• Stamp duties other

than duties or fees

collected by means of

judicial stamps, but

not including rates of

stamp duty

6

The constant blurring of taxing jurisdiction between the Centre and the

States has necessitated multiple Constitutional challenges

Excise DutyCentral excise duty is an indirect tax which is charged on such

goods that are manufactured in India and are meant for

domestic consumption.

It is mandatory to pay duty on all goods manufactured, unless

exempted. For example, duty is not payable on the goods

exported out of India. Similarly exemption from payment of

duty is available, based on conditions such as kind of raw

materials used, value of turnover (clearances) in a financial

year, type of process employed etc.

Importance of central excise duty

Central excise revenue is the biggest single source of

revenue for the Government of India. The Union

Government tries to achieve different socio-economic

objectives by making suitable adjustments in the

scope and quantum of levy of Central Excise duty.

The scheme of Central Excise levy is suitably adapted

and modified to serve different purposes of price

control, sufficient supply of essential commodities,

industrial growth, promotion of small scale industries

and like Authority for collecting the Central Excise

duty.

Types of Excise Duties Basic Excise Duty

This is the duty charged under section 3 of the

Central Excises and Salt Act,1944 on all excisable

goods other than salt which are produced or

manufactured in India at the rates set forth in the

schedule to the Central Excise tariff Act,1985.

Additional Duty of Excise

Section 3 of the Additional duties of Excise (goods of special importance) Act,1957 authorises the levy and collection in respect of the goods described in the Schedule to this Act. This is levied in lieu of sales Tax and shared between Central and State Governments. These are levied under different enactment's like medicinal and toilet preparations, sugar etc. and other industries development etc.

Special Excise Duty

As per the Section 37 of the Finance Act,1978 Special excise Duty was attracted on all excisable goods on which there is a levy of Basic excise Duty under the Central Excises and Salt Act,1944.Since then each year the relevant provisions of the Finance Act specifies that the Special Excise Duty shall be or shall not be levied and collected during the relevant financial year.

VALUATION FOR EXCISE DUTY

Specific duty

Tariff value

MRP based valuation

Assessable Value

DESCRIPTION (length in mm) BED Rs. Per 1000

sticks (existing rate)

BED Rs. Per 1000

sticks (new rate)

Non filter not exceeding 65 509 No change

Non-filter exceeding 65 but not

exceeding 70

1463 1772

Filter not exceeding 65 509 No change

Filter exceeding 65 but not exceeding

70

1034 1249

Filter exceeding 70 but not exceeding

75

1463 1772

Filter exceeding 75 but not exceeding

85

1974 2390

Other 2373 2875

Liability to Pay Excise DutyGoods themselves cannot pay duty so the person who create the taxable event must discharge the liability which he had created. 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

Those who get the goods manufactured by other parties

Payment of excise duty In case of Non-SSI (small scale industries) excise duty is

payable monthly, for SSI it is payable quarterly.

In case of delayed payment, interest should be deposited at the

rate of 13% p.m. or Rs.1000 per day, whichever is higher,

along with duty.

Exemptions to Excise Duty

(i) Central excise rules grant exemption from duty if goods

are exported under bond, except export to Nepal and

Bhutan.

(ii) SSI manufacturers having annual turnover of below

Rs.1crore. Once their turnover touches Rs.1crore, they

should give the prescribed declaration to the

Jurisdictional Superintendent of Central Excise.

(iii) Approved/licensed units in Export Processing Zones,

Special Economic Zones and 100% Export Oriented

Units.

Benefits of CENVATSingla enterprises produces 10kgs of wafers per day by using inputs of Rs.150. the company added a value of Rs.10 per kg. The excise duty is 16%. Calculate the total excise duty paid after a month through (i) with cenvat (ii) without cenvat.

Solution: (i) With Cenvat

Input Cost = Rs.150

Value added = 10×10 = Rs.100

Total = Rs.250

Duty (16%) = Rs. 40

Total = Rs.290

Total duty paid per month = Rs. 40×30

=Rs.1200

(ii) Without Cenvat

Input Cost = Rs.150

Duty (16%) = Rs. 24

Total = Rs. 174

Value added = Rs.100

Total = Rs. 274

Duty (16%) = Rs. 43.84

Total = Rs. 317.84

Total duty paid = Rs. (43.84 + 24.00) ×30

=Rs. 2035.20

Hence,With Cenvat is beneficial to the customer

Highlights of Union Budget

Basic excise duty on cigarettes and other products is being increased.

Basic excise duty is being increased on marble slabs and tiles from ` 30 per square meter to ` 60 per square meter’

sulphur recovered as by product in refining of crude oil used for the manufacture of fertilisers is exempt from excise duty.

Branded Ayurvedic medicaments and medicaments of Unani, Siddha, Homeopathy or Bio-chemic system are being brought under MRP based assessment with an abatement of 35% from the MRP.

All handmade carpets and carpets & other textile floor coverings of coir and jute, whether or not handmade, falling under Chapter 57, are being fully exempted from excise duty

Highlights of Union Budget Excise duty of 4% is being imposed on silver produced or manufactured

during the process of zinc or lead smelting

Excise duty on mobile handsets including cellular phones having retail sale

price more than Rs. 2000/- is being increased from 1% to 6%.

The validity period of concessional excise duty of 6% granted to specified

parts of hybrid and electric vehicles is being extended by two more years up

to 31st March, 2015.

Excise duty on SUVs and engine capacity >1500 cc is being increased from

27% to 30%

ITEM EXCISE DUTY

IMFL 200% of�manufacturing

cost or Rs.160/- per

proof litre

MILD BEER

less than 5% alcohol

100% of�manufacturing

cost or Rs.15/- per bulk litre

whichever is higher

FEREMENTED BEER

more than 5% alcohol

125% of�manufacturing

cost or Rs.20/- per bulk litre

whichever is higher

Wine from Grapes within the state without addition of alcohol 100% of�manufacturing

cost

Mild liquors Liquors other than Beer having alcohol less than 5% 75% of�manufacturing

cost or Rs.12/- per bulk litre

whichever is higher

Wines from gropes produced within �the state with addition of

alcohol

125% of�manufacturing

cost

REFERENCE• Internet

• Central Board Of Excise and Customs-www.cbec.gov.in

Commissionerate Of State Excise Maharashtra State-

stateexcise.maharashtra.gov.in

Thanking You