What is the Difference Between Excise Duty and Custom Duty in Nepal?
The government uses welfare state duties as a source of revenue to fund a variety of social and development projects. The government is able to run the state because of taxes and duties. The Excise Duty Act, 2058 (2001) was passed in order to levy Excise Duty in Nepal, and the Customs Act, 2064 (2007) was passed in order to determine Customs Tax.
Duty, also known as an indirect tax, is a tax levied on goods imported from another country as well as goods manufactured in the country. Excise duty is levied primarily on alcoholic beverages, mineral oils, and tobacco products, as well as the importation of all types of vehicles in Nepal.
The argument for increased excise duties on alcohol and tobacco products is that drinking and smoking are harmful to one’s health and that increased excise duties help to reduce consumption. Environmental concerns have played a growing role in determining the nature and application of excise duties to, in particular, road fuel over the last decade (It should be noted that duty is only levied on produce, not individuals).
Customs duty is a tax levied on imported goods from another country
Excise duty is levied in addition to VAT, and excise duty accounts for the majority of the price of goods. Excise duty is based on value (ad valorem), which means that the duty is calculated based on the number of goods or the volume of goods.
The assessable value of any item determines the customs duty. The World Customs Organization established the assessable value. Every country has a general tendency to levy high customs duties on alcoholic beverages and tobacco.
Each country has its own set of rules and regulations, as well as methods for collecting excise and customs duties. Excise and customs duties may differ from one country to the next.
The majority of administrative procedures, such as valuation, confiscation, refund, appeal, and settlement, are the same for excise and customs duty.
‘Customs Duty’ Definition
Customs Duty is defined in section 2 (v) of the Customs Act of 2064 (2007).
What is the Distinction Between Excise and Customs Duty?
The following are the distinctions between excise duty and customs duty:
Excise duty is levied on domestically produced goods. Customs duty, on the other hand, applies to goods sold in Nepal but manufactured in other countries.
Excise duty is paid by manufacturers of goods. Customs duty, on the other hand, is paid by the importer of goods.
The preceding discussion provides individuals with a thorough understanding of excise duty meaning, types, eligibility, and payment procedures.
The preceding discussion provides individuals with a thorough understanding of excise duty meaning, types, eligibility, and payment procedures.
Excise duty is a type of tax levied on goods for their manufacture, licensing, and sale. Excise duty is an indirect tax paid to the Government of Nepal by producers of goods. It is the inverse of Customs duty in that it applies to goods manufactured in the country, whereas Customs duty is levied on those coming from outside the country.
The preceding discussion provides individuals with a thorough understanding of excise duty meaning, types, eligibility, and payment procedures.
Excise duty is a type of tax levied on goods for their manufacture, licensing, and sale. Excise duty is an indirect tax paid to the Government of Nepal by producers of goods. It is the inverse of Customs duty in that it applies to goods manufactured in the country, whereas Customs duty is levied on those coming from outside the country.
Customs duty rates are either specific or ad valorem, which means they are based on the value of the goods. According to Section 3 of the Excise Duty Act, 2058 (2001), excise duty shall be collected in any one year in any product or service pursuant to this Act and the Rules framed under this Act the rates of Excise Duty are outlined.
While revenue is the most important consideration, customs duties may be imposed to protect domestic industries from foreign competition.
Who Must Pay Excise Duty?
Excise Duty Act, 2058 (2001). The excise duty imposed by this Act shall be collected as follows:
- In the case of a product, at the time when an enterprise’s product is exported for sale,
- In the case of a service, at the time the invoice is issued to the consumer.
- In the case of a product to be imported, at the time the product is imported into Nepal for customs purposes.
- If an excise duty must be levied on a product at the time of manufacture, the procedures must be followed.
According to the law, the following individuals or entities are obligated to pay excise duty:
- Individuals or entities involved in the production of goods. Those who own third parties manufactured goods.
- Persons or entities that produce goods by employing laborers.
- Now that people understand the definition, types, and eligibility of excise duty, let’s look at when and how to pay it.
Which goods are subject to excise duty in Nepal?
The Excise Duty Act, 2058 (2001), imposes excise duty on a variety of products. These are as follows:
Non-renewable Products: Products made from nonrenewable energy sources, such as metals and industrial chemicals, fall into this category.
Live animals, fish, meat, eggs, honey, and other edible animal products are all included in this category. Plants, flowers, leaves, and edible vegetable parts are examples of other vegetable products.
Spices, starch, malt, seeds, vegetable extracts, and other miscellaneous products are examples of miscellaneous products.
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Alpana Bhandari is a founding partner and CEO of Prime Legal Consultants and Research Center. She graduated from American University Washington College of Law. She specializes in corporate/arbitration and family law.
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