Registration / Assessment / Reply to show cause Notice / Litigation in taxes
➤➤ Central Board of Indirect Taxes and Customs
- Central Board of Indirect Taxes and Customs (erstwhile Central Board of Excise & Customs) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST and Narcotics to the extent under CBIC’s purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissionerates and the Central Revenues Control Laboratory.
- Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on import and export of goods. The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.
- The rate of Customs duty varies depending on where the goods were made and what they were made of.
- Custom duty in India is defined under the Customs Act, 1962, and all matters related to it fall under the Central Board of Excise & Customs (CBEC).
Types of custom duty
- Excise duty is a form of tax imposed on goods for their production, licensing and sale. An indirect tax paid to the Government of India by producers of goods, excise duty is the opposite of Customs duty in that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.
- At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc. However, the Goods and Services Tax (GST), introduction in July 2017, subsumed many types of excise duty. Today, excise duty applies only on petroleum and liquor.
- Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.
Types of excise duty in India
- Before GST kicked in, there were three kinds of excise duties in India.
- Basic Excise DutyBasic excise duty is also known as the Central Value Added Tax (CENVAT). This category of excise duty was levied on goods that were classified under the first schedule of the Central Excise Tariff Act, 1985. This duty was levied under Section 3 (1) (a) of the Central Excise Act, 1944. This duty applied on all goods except salt.
- Additional Excise Duty
- Additional excise duty was levied on goods of high importance, under the Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957. This duty was levied on some special category of goods.
- Special Excise Duty
- This type of excise duty was levied on special goods classified under the Second Schedule to the Central Excise Tariff Act, 1985.
- Excise taxes are taxes required on specific goods or services like fuel, tobacco, and alcohol.
- Excise taxes are primarily taxes that must be paid by businesses, usually increasing prices for consumers indirectly.
- Excise taxes can be ad valorem (paid by percentage) or specific (cost charged by unit).
- Some excise taxes can be required directly from the consumer like property taxes and excise tax penalties on certain retirement account activities.
Excise taxes can fall into one of two categories:
Ad Valorem Excise Taxes
- Ad valorem is a Latin phrase that literally means “according to value.” An ad valorem tax is charged by percentage. This results in an excise tax that is based on the value of the product or service. For example, the IRS levies a 10% excise tax on indoor tanning services. This means that if a tanning salon charges $100 for a tanning session, it must pay the IRS $10 in excise tax. Similarly, if the company charges $200 for tanning, it must pay a $20 excise tax. Other types of ad valorem excise taxes include firearms (10%), airline tickets (7.5%), and heavy trucks (12%). 5 Property taxes can also be considered a type of ad valorem excise tax.
Specific Excise Taxes
- Specific excise taxes are a set tax or fee added to a certain product on a per-unit basis. Some examples of federal, specific excise taxes include cigarettes ($1.01 per pack of 20), pipe tobacco ($2.83 per pound), beer ($7 for the first 60,000 barrels), cruise ship passengers ($3 per passenger), and gasoline ($0.183 per gallon).
- Often sin taxes on targeted goods like beer and alcohol will be taxed at the federal level and also taxed heavily by the state, making the cost of these items higher. For example, New York has a specific excise tax of $4.35 per cigarette pack of 20.6 Combining this with the federal tax of $1.01 makes the excise taxes alone $5.36. These taxes have a considerable impact on the consumer.
Attending Customs issues right from the clearance, valuation, classification and rate of duty along with regular updates.