Finance Ministry Proposes New Excise Law To Replace With Outdated Central Excise Act

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The Finance Ministry announced that the Central Board of Indirect Taxes and Customs (CBIC) has invited feedback on the draft Central Excise Bill, 2024, by June 26th, as a step in the pre-legislative consultative process.

Finance Ministry Proposes New Excise Law to Replace with Outdated Central Excise Act

NEW DELHI: The Finance Ministry announced plans to introduce a new Central Excise law to replace the outdated Central Excise Act, which has been in place for over eight decades.

With the majority of goods now covered under the Goods and Services Tax (GST), only a few items like crude oil, petrol, diesel, natural gas, and jet fuel remain under the purview of the Central Excise Act, generating significant tax revenues for both the Union and State Governments.

The finance ministry announced that the Central Board of Indirect Taxes and Customs (CBIC) has invited feedback on the draft Central Excise Bill, 2024, by June 26th, as a step in the pre-legislative consultative process.

Gunjan Prabhakaran, a partner and leader of indirect tax at BDO India, noted that considering the timing of the release of the draft for comments and the submission timeline, there’s a likelihood that this new bill could be introduced during the upcoming budget session.

The proposed Central Excise Bill for 2024 aims to modernize the existing legislation, focusing on enhancing the ease of doing business and eliminating obsolete provisions.

“The proposed Central Excise Bill aims to replace the outdated Central Excise Act of 1944 with a comprehensive and modern central excise law. The key objectives of the new legislation are to promote ease of doing business and eliminate old, redundant provisions,” stated the ministry.

The Bill consists of 12 chapters, 114 sections, and 2 schedules. Replacing archaic laws has been a legislative priority for the current National Democratic Alliance (NDA) government. Over time, the Central Excise Act of 1944 has undergone numerous amendments, making its provisions convoluted and challenging to understand. Introducing a modernized law could assist professionals and businesses in more effectively complying with central excise requirements.

Despite industry calls to include crude oil and petroleum products in the GST framework, achieving consensus has proven challenging due to states’ reluctance to relinquish their taxation authority over these items.

Unlike the Central Excise Act, GST operates without the complication of “tax on tax,” as it is applied only at each stage of the supply chain based on the value added, thereby reducing business costs and alleviating the tax burden on consumers.