What is the difference between GST and excise duty?

GST is a comprehensive indirect tax on goods and services, while excise duty specifically targets the production or manufacturing of certain goods.

What are the goods that come under excise duty?

In India, excise duty mainly applies to products such as petroleum products, tobacco products, and alcoholic liquor for human consumption.

Is excise duty levied by both central and state governments?

Excise duty is primarily levied by the central government, although states may impose additional duties on certain goods.

Through which banks can we pay excise duty online?

Excise duty can be paid online through authorised banks, including State Bank of Mysore, State Bank of Travancore, HDFC Bank, Canara Bank, Allahabad Bank, State Bank of India, Syndicate Bank, Oriental Bank of Commerce, United Bank of India, IDBI Bank, Punjab National Bank, ICICI Bank, UCO Bank, Axis Bank, Vijaya Bank, Union Bank of India, State Bank of Patiala, Central Bank, Punjab National Bank and more.

Is excise duty levied on exports?

Excise duty is not levied on exports; instead, it is usually exempted or refunded to promote international trade competitiveness.

What is the difference between sales tax and excise duty?

Sales tax is collected when a customer buys a product. Excise duty, on the other hand, is charged when certain goods are made or produced.

How does Excise Duty impact my ITR filing?

Businesses dealing with excisable goods may need to include related tax details while filing their income tax returns. This usually depends on the nature of the business and its income records.

Can I use the income tax calculator to determine my excise duty liability?

No, income tax calculators are meant for calculating income tax only. Excise duty is calculated separately based on the type and value of goods.

Is input tax credit available under Excise Duty?

After GST, input tax credit under excise duty is available only in limited cases. It may apply to businesses dealing with goods that still come under excise laws.

Are there any tax-saving investments linked to Excise Duty?

Excise duty is charged on certain goods and is not linked to tax-saving investments. Tax-saving options are generally connected to income tax benefits.

Excise duty is an indirect tax charged on specific goods that are manufactured or produced in India. Even though GST replaced excise duty on most products, it still applies to certain items such as petroleum products, and tobacco products for human consumption.

Knowing the excise duty meaning is important for businesses involved in manufacturing as well as consumers who want to understand how taxes affect product pricing. It also helps in understanding payment rules, compliance requirements, and the role excise duty continues to play in India’s taxation system for selected goods.

Key Takeaways

Excise duty is charged on selected goods manufactured in India and continues to apply to a few products even after GST.

Basic, special, and additional excise duty are the main categories used for different types of goods and taxation purposes.

Manufacturers and businesses dealing with excisable goods are required to follow proper payment procedures and related compliance rules.

Failure to pay excise duty within the prescribed time may result in penalties, fines, or other legal action under applicable laws.

What is Excise Duty?

Excise duty is levied on the manufacture or production of specified goods, not on their sale. It becomes payable at the time of removal of goods from the factory or warehouse. It is an indirect tax and is not paid directly to the tax authorities by the buyer. Instead, it is added to the product’s cost by the producer or merchant. The rules related to excise duty in India are outlined in the Central Excise Act, 1944, and are administered by the Central Board of Indirect Taxes and Customs.

Types of Excise Duty

Basic Excise Duty: It is levied under Section 3 of the Central Excise Act, 1944, on excisable goods manufactured in India, at rates specified in Schedule I of the Central Excise Tariff Act, 1985.

Special Excise Duty: It is an additional tax on specific goods designed for targeted regulation and extra revenue. It is usually added to the product price and is indirectly paid by consumers. Products under the Central Excise Tariff Act 1985, Schedule 2 are levied this tax.

Additional Excise Duty: It is different from basic and special duties and is levied on specific goods to achieve policy goals and meet revenue targets. This duty is generally included in the final price of the product. Products under the Additional Duties of Excise Act 1957, Section 3, are subject to this tax.

Note: Effective February 1, 2026, tobacco products will attract a 40% GST. CBIC has imposed additional excise duty ranging from ₹2,050-₹8,500 per thousand sticks of cigarettes, depending on the length.

Who is Eligible to Pay Excise and Taxation Duty?

Excise duty is generally paid by businesses and individuals involved in manufacturing or handling excisable goods in India. It mainly applies to products such as petroleum goods, tobacco products, and alcoholic liquor for human consumption.

Manufacturers producing excisable goods are responsible for paying excise duty.

Businesses getting goods manufactured through third-party units may also be liable under excise rules.

Warehouse owners storing excisable goods may need to maintain records and follow compliance requirements.

Businesses dealing in excisable goods (e.g., petroleum, tobacco, alcoholic liquor) must follow prescribed payment and compliance under the Central Excise Rules, 2017.

Also Read About: Difference Between VAT and GST

When and Who Should Pay Excise Duty?

Excise duty must be paid by:

Manufacturers of goods.

Those who got the goods manufactured by hiring labourers.

Those who have goods manufactured by other parties.

Individuals can benefit from tax exemptions based on factors like annual revenue, raw material usage, and operational processes. However, those ineligible for exemptions must ensure timely payment of excise duty to meet regulatory requirements.

Excise duty is payable on the removal of goods from the factory or a licensed warehouse. Under Rule 8 of the Central Excise Rules, 2017, manufacturers must pay duty by the 5th day of the following month for non‑electronic payments, or by the 6th day of the following month if paid electronically. For March, the due date is 31 March.

For example, if goods are removed in August, duty is payable by 5 September for non-electronic payments, or by 6 September if paid electronically through internet banking.

What Happens if You Don’t Pay Excise Duty?

Failure to pay excise duty or violating regulations on excisable goods can lead to severe consequences under the Central Excise Act. Under Section 9 of the Central Excise Act, 1944, wilful evasion of excise duty involving an amount exceeding ₹50,00,000 may attract imprisonment ranging from a minimum of six months to a maximum of seven years, in addition to a fine. Delayed payments incur interest u/s 11AA.

To avoid legal penalties, individuals must pay excise duty on time and ensure accurate tax filings. Non-compliance may result in imprisonment and financial penalties as stipulated by the Central Excise Act.

Also Read About: What is GST Return and GST Return Filing?

Steps To Pay Excise Duty

You can make the payments via the ICEGATE e-payment portal (cbic-gst.gov.in integrated) in the following manner:

Enter details.

The system will redirect to ICEGATE for payment (NEFT/RTGS/net banking).

Generate a challan and make the payment via an authorised bank.

Receive the CIN counterfoil as proof.

Later, you can track status on ICEGATE/CBIC-GST.

Also Read About: Difference Between Direct and Indirect Tax

Custom Duty vs Excise Duty

Aspect	Customs Duty	Excise Duty
Scope	Applied on goods during import or export.	Applied on goods produced or manufactured locally.
Application	Levied at the point of entry or exit.	Levied at the production or manufacturing stage.
Nature	Tariff or tax to regulate trade.	Indirect tax to regulate production.
Authority	Administered by the customs department.	Administered by the Central Board of Indirect Taxes and Customs.
Objective	Regulate international trade and generate revenue.	Regulate production and provide revenue for the government.

Also Read About: What is GST?

Conclusion

Excise duty is still charged on a few specific goods in India, even after GST was introduced. Products such as petroleum items, tobacco, and alcoholic liquor for human consumption continue to come under this tax. For businesses, it is important to follow the required payment process and related rules. It also gives consumers a better idea of how certain taxes can influence the final price of products sold in the market.

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Excise Duty: Meaning, Types and Steps to Pay Excise Tax