Difference Between Excise Duty and Custom Duty

Difference Between Excise Duty and Custom Duty

Many goods and services purchased by individuals are taxed by the government. For the country’s economic growth and social programmers, this method of collecting taxes is tremendously helpful. One of the most significant ways the government makes money is via the collection of charges and taxes. There is no way the state can function properly without following this protocol.

Instead of being a direct tax, duty is an example of an indirect tax. All goods and services inside a country’s boundaries are subject to these taxes. The taxes placed on produced or imported goods are not levied on individual citizens. Customs and excise taxes are governed by a unique set of laws in every nation. In different countries, different taxes are levied.

Excise Duty Vs. Custom Duty

Excise duty, on the other hand, is a tax imposed on goods manufactured inside the limits of a state. When it comes to items imported from other nations or territories, customs duty is levied. Customs duty and excise duty share a number of characteristics. Refund, settlement, confiscation, administrative processes and valuation values are the same for both forms of taxes

When taxes are levied, they might be either internal or national in nature. Items produced inside the limits of a country or state are subject to excise tax. Excise duties are often based on a product’s volume, numerical value, or quantity. Excise duty, a kind of tax, is paid by manufacturers.

Customs and excise taxes are external in nature. Customs duties are levied on imported goods from other countries or territories. Customs duty is calculated based on the value of the goods and products. Customers who buy products and services from importers are subject to a charge called customs duty, which is imposed by the government.

Excise Duty

Taxes on goods produced inside a country’s boundaries, such as excise duty, are levied. Excise taxes are often calculated based on a product’s mass, value, and quantity. There is an excise tax that must be paid by manufacturers. Excise duty also imposes VAT or value-added tax and sales tax.

Excise tax takes up a significant amount of the cost of many goods, as may be observed by comparing the rates or price tags of different items. According to ad Valorem, this tax form is valued. As a result, this is a kind of indirect tax. The shopkeeper or merchant usually collects the money from the purchasers or consumers. Later, the government receives its share of the money.

It is necessary to pay excise tax when the produced items have been removed from the manufacturing facility or warehouse in order for them to be sold. However, if no sale is made, the excise tax is included in the produced items and must be paid to the government.

Custom Duty

Products imported from other countries or territories are subject to customs taxes. Custom duty is calculated based on the value of the goods and products. Taxes imposed on corporations, organisations, and people that buy products and services from importers are referred to as customs duty.

In order to calculate customs duties, a product’s assessed worth must be taken into account. In the end, this assessable value is determined by the World Customs Organization. A four- to ten-digit number or value is assigned to every product, and this code or value represents the good’s measurable value.

Tobacco, booze, and other sedatives including ketamine, fentanyl, and phencyclidine have the highest import taxes. Law and order, laws and regulations, and customs duties are all in place in every country.

Difference Between Excise Duty and Custom Duty

  1. Internal or national excise taxes may be charged. When it comes to customs duties, on the other hand, they are external.
  2. When a product is produced in a state or country, it is subject to excise taxes. Custom duty, on the other hand, is imposed on products imported from other nations or territories.
  3. It is common practice to compute excise duty based on product volume, numerical value, and quantity. Customs duty, on the other hand, is based on the assessed worth of the goods and products.
  4. A tax that is paid by manufacturers is excise duty. When it comes to paying taxes, the companies that acquire goods and products from importers must pay customs duty.
  5. Customs duties and excise taxes both share several features. In both forms of tax, processes in the administrative process such as refunds, settlements, seizure, and valuation have the same value.


Various commodities and services are taxed. The government buys for the citizens. Using this approach of levying taxes is an effective way to raise money for the country’s development and social programmers. The collection of duties and taxes is a major source of revenue for the government. This procedure is critical to the proper operation of the state.

Duty, on the other hand, is not a direct tax. It’s more of a hidden tax. These taxes are levied on all items that are produced and sold inside a nation’s borders. Because these indirect taxes are placed on produced or imported items rather than individual people, they are not taxed at the individual level. Customs and excise duties are imposed in accordance with the laws and regulations of each country. From country to country, these charges are collected in a different manner.