What why and logic of excise.

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ankur (Querist)
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26 July 2013 Dear sir / Madam,

As per Act it is said that every manufacturer of producer have to pay excise duty on goods produce by them. but my Question is that what is excise. and Why and logic behind Calculation of excise.

Thanking You,

Ankur

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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26 July 2013 In the Indian tax structure, there are a lot of taxes that people pay for different reasons. Income tax, sales tax, entertainment tax, value added tax etc. All these taxes are existent because in some way or the other it impacts and helps the economy. One such tax that is prevalent in any manufacturing sector is the excise duty.

An excise or excise tax (sometimes called an excise duty) is a type of tax charged on goods produced within the country (as opposed to customs duties, charged on goods from outside the country). It is a tax on the production or sale of a good. This tax is now known as the Central Value Added Tax (CENVAT).

Though the collection of tax is to augment as much revenue as possible to the government to provide public services, over the years it has been used as an instrument of fiscal policy to stimulate economic growth.

Thus it is one of the socio-economic objectives.

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

Under the different sections of the central excise act, the fines for evading tax can range from twenty-five to fifty per cent of the amount of duty evaded.