What is Excise Duty? Meaning, Types, and Current Applicability (2025)


Excise duty is an important principle regarding the indirect tax system in India, particularly in industries that exist in the manufacturing business. At Eximpe, we believe that understanding Excise's duty is vital to compliance and strategies in the modern day of regulations.

What is Excise Duty?

Excise duty is an indirect tax paid on the manufacture or the production of goods in India. Excise duty is different from customs duty since customs duty is imposed on foreign goods while excise duty is paid on any products that are manufactured locally. The tax is levied on manufacturers or producers before goods are set for the market, and the burden is eventually imposed on consumers in the form of product pricing.

Types of Excise Duty

Excise duty in India is categorized into three main types, each serving a distinct purpose within the tax framework:

  • Basic Excise Duty: It is levied under the Central Excise Act of 1944, and it is the basic excise duty on all the excisable commodities manufactured in India, other than salt. It provides the skeleton of excise yields.

  • Excise Duty (Additional): It is levied on particular specified goods in addition to the basic excise duty. It is often a replacement for sale tax, and it divides itself between the central and the state level governments.

  • Special Excise Duty: Applied on a few luxury/demerit goods, which include tobacco and pan masala, with the aim of discouraging consumption and additional revenue for the state.

Who Can Levy Excise Duty?

In India, only the central government has the authority to levy excise duty. The revenue generated is used for public welfare, infrastructure, and economic activities. Manufacturers or producers of excisable goods are responsible for paying excise duty at the time of production or removal of goods from the factory.

Is Excise Duty Still Applicable in India (2025)?

One of the most asked questions is: Is excise duty still applicable in India? It is both yes and no. Following the introduction of Goods and Services Tax (GST) in July 2017, excise duty also largely became a part of GST on most goods. Nevertheless, excise duty in India only continues on some products, including petroleum products (petrol, diesel), alcoholic drinks, and tobacco products. Such updates as Finance Bill 2025 have continued to sustain excise duty on these particular categories. The central government, time and again, changes rates and coverage through notifications and budget announcements to match policy objectives and fiscal requirements.

Key Takeaways for Businesses

  • Excise duty is relevant if your business deals in petroleum, alcohol, tobacco, or other notified goods.

  • Compliance involves registration, maintaining records, calculating liability, timely payment, and filing returns.

  • Stay updated with government notifications, as rates and applicability can change with each budget cycle.

Conclusion

While excise duty in India has a narrower scope post-GST, it remains a critical tax for certain sectors. At Eximpe, we recommend that manufacturers and traders dealing with excisable goods stay vigilant about regulatory changes and ensure timely compliance to avoid penalties and disruptions.

Understanding what is excise duty, the types of excise duty, and its current applicability will help your business navigate India's evolving tax landscape with confidence.

FAQs

1. What is excise duty, and who pays it?

Excise duty is an indirect tax levied on goods manufactured within India, paid by the manufacturer or producer at the time of production or removal from the factory.

2. Is excise duty still applicable after GST?

Yes, excise duty is still applicable, but only on select products such as petroleum (petrol, diesel), alcoholic beverages, and tobacco; most other goods are now covered under GST.

3. What are the main types of excise duty in India?

The three main types are Basic Excise Duty, Additional (or Special) Excise Duty, and Special Excise Duty, each targeting different categories of goods.

4. Who is responsible for collecting excise duty in India?

Only the central government has the authority to levy and collect excise duty in India.

5. What are the current excise duty rates on petrol and diesel (2025)?

As of April 8, 2025, excise duty is set at ₹13 per litre for petrol and ₹10 per litre for diesel.

Comments

Post a Comment

Popular posts from this blog

Top 10 Mistakes First-Time Freelancers Make with Cross-Border Transactions

Freelancing globally has become a lucrative opportunity for professionals, especially in India. However, navigating cross-border transactions can be challenging. Here are ten common mistakes first-time freelancers make and how to avoid them: Overlooking Hidden Fees in Cross-Border Transactions Most freelancers do not take markups on exchange rates and hidden charges by payment providers or banks into consideration. These have the potential to cut earnings sharply. Platforms with clear pricing and competitive exchange rates, such as EximPe, can help reduce these charges. Providing Incorrect Recipient Details Errors in payments, such as the wrong name or account information of the recipient, can lead to either nonpayment or even payment delays. Check the details of the recipient and, with the appropriate tools, confirm their precision. EximPe simplifies the document check and submission processing steps for hassle-free transactions. Ignoring Local Regulations Every country has its guidel...
Read more

Budgeting Tips for Freelancers Earning in Multiple Currencies

  Budgeting when a freelancer who makes money in various currencies can be rewarding but challenging. As work becomes more globalized, several freelancers now have to manage different sources of income in diverse currencies. This blog has set out to give practical budgeting advice geared specifically towards Indian freelancers making money in multiple currencies and included relevant EximPe tips for users. Understanding the Multi-Currency Landscape Freelancers often receive payments in different currencies due to international clients. This can lead to complexities in budgeting, especially when dealing with fluctuating exchange rates and varying transaction fees. The Importance of a Multi-Currency Account A good way to handle multiple currencies is to open a multi-currency account. This enables you to keep and trade in multiple currencies without having to convert them, which may attract charges constantly. EximPe provides solutions that suit freelancers who have to deal with forei...
Read more

Is IFSC and SWIFT Code the Same? Key Differences Explained

  Whether in the banking or the financial world, you find almost all the time where you have a myriad of codes meant to ease the conducting of transactions and secure them as well. Two of such codes, the Indian Financial System Code (IFSC) and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) Code are common. While both serve to identify banks, a common misconception is that "is IFSC and SWIFT code same?" And the short response is that no, they are not. Understanding the distinct purposes and structures of IFSC and SWIFT code is crucial for anyone involved in financial transactions, especially if you're dealing with both domestic and international money transfers. It is time to explore the major distinctions to debunk these crucial banking identifiers with this simple guide by EximPe . What is an IFSC Code? Indian Financial System Code is also referred to as the IFSC code. It is an 11-character code (a mixture of alphabets and numbers), which is a di...
Read more