New Central Excise Law to replace eight-decade-old excise law said the Finance Ministry; New law to be passed in the upcoming budget session

The eight-decade-old central excise law will become obsolete as a new central excise law will soon replace it, said the Finance Ministry on Tuesday, while seeking public views on a draft bill.

The Central Board of Indirect Taxes and Customs (CBIC) is seeking feedback on the draft Central Excise Bill, 2024 by June 26, as part of the pre-legislative consultative process. Looking at the timeline and the release timing of the draft bill, the new law will likely be passed in the upcoming budget session, said Gunjan Prabhakaran, partner and leader of indirect tax at BDO India.

The current Central Excise Act was enacted in 1944, in pre-independence India. The new bill will focus on promoting ease of doing business and repealing old redundant provisions, the Ministry said. The proposed Bill has 12 chapters, 114 sections and two schedules. The government has always pressed to replace the archaic excise laws, as the multiple amendments to the laws have made it difficult to comprehend. Replacing it with the new norms could help professionals and businesses in compliance, the lawmakers feel.

Demands from industry

The industry has always advocated the inclusion of crude oil and petroleum products in GST. However, it has not become a reality because the states are not ready to renounce their power to the GST council in taxing these items. Unlike the old excise laws, GST doesn’t create issues like ‘tax on tax’ because it only taxes the added value at each step of the supply chain. Due to this, doing business becomes cheaper and it lowers the tax burden for consumers.

As part of the laws, the Union Government imposes central excise duties on commodities manufactured or produced within the country and consumed within the country. On the other hand, the state excise duties are levied on alcoholic drinks, narcotics etc.

Excise duty is a form of indirect tax the government of India imposes on the production, sale, or license of certain goods.