CENTRAL EXCISE DAY- THE 24th FEBRUARY

The logo is no way used in Official Capacity

Today the February 24^th is celebrated as Central Excise Day by the Central Excise department.  The day marks enactment of the Central Excise Act  in 1944. Indirect taxes, in India had been a major contributor to the Gross Domestic Product. To say it right, Indirect taxes are the mainstay of India’s tax system. The central excise duty, leviable on the production or manufacture of goods ranging from aerated waters to zip fasteners, had been the single most important source of revenue, accounting for about one-third of consolidated (the Central, State and Union Territory Government) tax revenues and about one-fourth of current revenues. Ten major commodities (e.g., crude oil, motor spirit, cement) currently account for 52.6% of the total central excise duty collections.

Of the indirect taxes, the Service Tax have exceeded the excise collection for the past few years. Service sector has enormous potential of tax collection. In the year 2010-11, the Central Excise and Service Tax contribute about 18% and 48% of the GDP respectively.

The Ministry have hiked the Central Excise from 8% advalorem to 10% with effect from 27^th Feb,2010. On looking at the tax income, contribution of Central Excise is on the lower side. The reason may be various.

It is better if the ministry brings down the rate of excise duty and increases its tax base. In most of the industrially developed nations, the rate of excise duty is far less than the Indian rate of duty, but the number of assessees and duty compliance are at the high end. These measures will, in the long run, result in increased tax base and tax collection. (The bell curve-inverse ‘U’).

Steps may be taken by the  Ministry of Finance

1.         To bring about uniform rate of duty to majority of the goods manufactured, avoiding the plethora of exemptions and concessions except most essential commodities, medical commodities according to its merit.
2.      To ensure minimum rate of duty for the manufactured products to achieve better tax compliance. This measure could lead to the increased production, increased number of industries, increased employment opportunities and obviously increased share of Excise duty in the GDP.
3.      Spending a little more for developing the infrastructure of the department. A little increase in the operational cost of the tax collection could result in better and efficient tax collection. For example, constructing Office buildings, providing required stationeries, effective implementation of ACES system which connects all the Commissionerates and the Ministry.
4.      Avoiding biasness among its Offices- For example, the infrastructure bestowed to the Large Taxpayer Unit Commisonerates is more than required whereas the conventional commisionerates and Divisions sometimes officiate in rented buildings
5.      Keep vigil in the functioning of Commisionerate Offices and ensure corruption free tax collection.

The steps are quite easy to pronounce, and tough in practicality. Still, result of the measures would be, the increased tax collection-increased allocation and increased standard of living of people; Grossly.

I extend all my greetings and my salutes to the Sentinels of Economic Front of India on this Central Excise Day