INTRODUCTION:

Tax:

Tax is nothing but money that people have to pay the Government, which is used to provide public
services.

Taxes are of two types:

1- Direct Tax.
2- Indirect Tax.

DIRECT TAX:

A Direct tax is a kind of charge, which is imposed directly on the taxpayer the examples of
direct tax include property tax and income tax. Alternatively, it can be said that a direct tax is one that is
taken away from one's salary or wages. When the tax is imposed by the government upon the property,
then it is called property tax,and when the tax is imposed by the government upon the individual is
called income tax that is called direct tax.

DIRECT TAX IS DIVIDED INTO THREE PARTS:

1.Income Tax
2.Wealth Tax
3.Corporate Tax

INDIRECT TAX:

A Indirect taxes are the charges that are levied on goods and services. Some of the
significant indirect taxes include VAT(Value Added Tax), sales tax, excise tax, stamp duties and
expenditure tax. Indirect taxes are not levied on individuals, but on goods and services. Customers
indirectly pay this tax in the form of higher prices. For example, it can be said that while purchasing
goods from a retail shop, the retail sales tax is actually paid by the customers. The retailer eventually
passes this tax to the respective authority. The indirect tax, actually raises the price of a good and the
customers purchase by paying more for that products. The indirect tax can be alternatively defined as
the charge that is paid by one individual at the beginning,but the burden of which will be passed over to
some other individual,who eventually holds the burden. The indirect taxes in india are enforced upon
different activities including manufacturing, trading, imports. Indirect taxes influence all the business
lines in India.

INDIRECT TAX IS DIVIDED INTO THREE PARTS

1.Excise Duty
2.Sales tax
3.Custom Duty
 CENTRAL EXCISE:

The Central Excise duty is levied in the term of central excise act, 1944 and the rates of
duty , ad-valorem (on the value) or specific, are prescribes under the schedule 1 & 2 of the central
excise tariff act, 1985. the taxable event under the central excise law manufacture and the liability of
central excise duty arises as soon as the goods are manufactured. The central excise officer are also
entrusted to collect other types of duties levied under additional duties (goods for special
importance)act additional duty (Textiles and textiles articles) Act, Cess etc.
Excise Tax is more commonly known as Excise Duty and is one of the most well known
forms of taxation in India. Any manufacturer of excisable products is liable to pay this tax and is levied
on a wide verities of commodities manufactured in India. For the Indian central government this duty is
an important source of revenue. The excise Tax is required to be paid before the goods leave the factory
as a result of which the small-scale industries do not pay Excise tax up to the specified value of goods
cleared from the factory. The state governments are liable to levy excise duty on a few commodities
including liquor, provided the central government fails to do so. At times when the manufactured goods
are exported excise drawback is available.
The Term “excisable goods” means the goods which are specified in the first Schedule and
the second schedule to the central excise tariff act 1985.

The term 'manufacture ' refers to any process:

• Related or supplementary to the combination of a manufactured product.

• Which is specific in relation to any goods in the section or chapter notes of the First schedule to
the Central Excise Tarrif Act 1985 as amounting to manufacture or
• which in relation to the goods specified in the Third schedule involves packing of such goods in
a unit container or labeling or re-labeling of containers including the declaration or alteration of
retail sale price on it or adoption of any other treatment on the goods to render the product
marketable to the consumer.

Three different types of Central Excise Duties exist in india. They are listed below:

Basic Excise Duty in India:

Excise duty, imposed under section 3 of the 'central Excises and Salt Act' of 1944 on all
excisable goods other than salt produced or manufactured in india, at the rates set forth in the schedule
to the central Excise tariff Act, 1985, falls under the category of Basic Excise duty in india.

Additional Duty of Excise:

According To section 3 of the 'additional duties of excise act' of 1957 permits the charge and
collection of excise duty in respect of the goods as listed in the Schedule of this act. This act tax is
shared between the central and state government and charged instead of sales tax.
 Special Excise Duty:

According to section 37 of the Finance Act, 1978 Special Excise Duty is levied on all excisable
goods that comes under taxation, in line with the Basic Excise Duty under the central excise and Salt
Act of 1944. therefore, each year the Finance Act spells out that whether the Special Excise Duty shall
or shall note be charged, and eventually collected during the relevant financial year.

CENTRAL EXCISE DUTY RATES IN INDIA:

The central excise duty rates in india has been raised from 4% to 8% and also decreased on
some of the following items . They are:-

● For specific food items like cakes,biscuits,and pastries.

● It is also suitable for medical products like pharmaceutical and drugs.
● In order to handle water the power driven pumps are used.
● For pressure cookers and fluorescent lamps.
● Central excise duty rates in india is applicable to the largest car vehicles which are reduced to
RS. 20000/- per vehicle to s. 15000/- per vehicle.
● Also, the excise duty on truck/lorries or reduced from 20% to 8%.
● excise duty on boiling point spirits is reduced to 14%.
● Finally, the excise duty on naphtha is reduced to 14%.
● Duty paid high speed diesel blended with upto 20% bio-diesel to be fully exempted from excise
duty.
● The ad valorem component of excise duty 6% on petrol intended for sale with a brand name to
be converted into a specific rate.
● Excise duty on manmade fibre and yam to be increased from 4% to 8%.
● Excise duty polyester chips to be increased from 4% to 8%.
● Excise duty on acrylonitrile to be increased from 4% to 8%.
● the scheme of optional excise duty of 4% for pure cotton to be restored.
● EVA compound manufactured on job work for further use in manufacture of footwear to be
exempted from excise duty
● Benefit of SSI exemption scheme to be extended to printed laminated rolls bearing the brand
name of others by excluding this item from the purview of the brand mane restriction.
● On packaged or canned software, excise duty exemption to be provided on the portion of the
value which represents the consideration for transfer of the right use such software, subject to
specified conditions.
● Excise duty on branded articles of jewellery to be reduced from 2% to Nil.

Excise Duty

• The general rate of CENVAT has been brought down from 16% to 14%
• The central on many goods like cars, writing paper, printing paper and packing paper, drugs and
pharmaceuticals, water filtration and purification devices, pan masala not containing tobacco
etc have been decreased.
• For goods like anti ADS drugs and bulk drugs, packaged tender coconut water, Tea and coffee
mixes, specified refrigeration equipment, etc have been exempt from excise duty.
 • For packaged software the duty has been increased from 8% to 12%.
• The duty of 1% on National Calamity and Contingent Duty has been imposed on mobile
phones.

IMPORTANCE OF CENTRAL EXCISE DUTY:

Central Excise Duty is biggest revenue 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 suitable
adopted 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.