Excise Duty vs. Custom Duty: Know the Difference
By Shumaila Saeed || Published on February 6, 2024
Excise Duty is a tax on the production, sale, or consumption of a commodity within a country. Custom Duty is a tax on imports and exports of goods.
Key Differences
Excise Duty is a domestic tax levied on the manufacture, sale, or consumption of goods within a country. It is often applied to items such as alcohol, tobacco, and fuel. Custom Duty, on the other hand, is a tax imposed on goods when they are transported across international borders. It is typically charged on imports to protect domestic industries or generate revenue.
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Feb 06, 2024
Excise Duty is governed by internal laws of a country and varies depending on the product and policies of the nation. It is a way for governments to control the consumption of certain goods. In contrast, Custom Duty is influenced by international trade agreements and diplomatic relations. It plays a crucial role in regulating trade between countries.
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Feb 06, 2024
Excise Duty can be specific (a fixed amount per unit) or ad valorem (a percentage of the value). It directly impacts the price of a product within a country. Custom Duty is usually calculated based on the value, weight, or quantity of goods imported or exported, and it affects the trade balance and international market competitiveness.
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Feb 06, 2024
The collection of Excise Duty is primarily aimed at generating revenue and sometimes to discourage the consumption of harmful products. Custom Duty serves as a tool for regulating foreign trade, protecting domestic industries, and raising revenue for the government.
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Feb 06, 2024
Excise Duty is often included in the price of a product, making it less visible to consumers. Custom Duty is usually more transparent, as it is charged at the border and is often itemized separately in the cost of imported goods.
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Feb 06, 2024
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Comparison Chart
Visibility to Consumers
Generally Included in Product Price
Charged Separately at Borders
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Excise Duty and Custom Duty Definitions
Excise Duty
Excise Duty can be specific (per unit) or ad valorem (percentage of value).
The Excise Duty on alcohol is calculated based on its volume and alcohol content.
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Custom Duty
Custom Duty is calculated based on the value, weight, or quantity of goods.
The Custom Duty on imported textiles is calculated per kilogram.
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Jan 24, 2024
Excise Duty
Excise Duty is a key revenue source for governments.
Revenue from Excise Duty on fuel helps fund public infrastructure projects.
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Jan 24, 2024
Custom Duty
Custom Duty is a tax levied on goods imported or exported across international borders.
Imported electronics are subject to Custom Duty at the border.
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Jan 24, 2024
Excise Duty
Excise Duty is often applied to luxury and environmentally harmful products.
Luxury cars attract a higher Excise Duty due to their premium nature.
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Jan 24, 2024
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Custom Duty
Custom Duty is used to regulate trade and protect domestic industries.
High Custom Duty on steel imports protects the local steel industry.
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Excise Duty
Excise Duty is charged on certain goods to discourage their excessive use.
The government imposed an Excise Duty on sugary drinks to promote healthier choices.
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Jan 24, 2024
Custom Duty
Custom Duty rates vary based on international trade agreements.
Trade agreements with neighboring countries have reduced Custom Duty on certain goods.
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Jan 24, 2024
Excise Duty
Excise Duty is a tax on specific goods produced and consumed within a country.
The increase in Excise Duty on cigarettes has led to higher retail prices.
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Jan 24, 2024
Custom Duty
Custom Duty contributes to a country's revenue and trade balance.
Increased Custom Duty on luxury imports has boosted government revenue.
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Jan 24, 2024
Repeatedly Asked Queries
Why do governments impose Excise Duty?
For revenue generation and to control the consumption of certain goods.
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Feb 06, 2024
Is Excise Duty visible to consumers?
It's often included in the product price and not separately itemized.
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Feb 06, 2024
Does Custom Duty apply to all international goods?
Most goods, but there are exemptions and variations.
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Feb 06, 2024
Can Excise Duty rates change?
Yes, they can change based on government policies.
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Feb 06, 2024
How is Excise Duty calculated?
It can be a specific amount per unit or a percentage of the value (ad valorem).
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Feb 06, 2024
What's the purpose of Custom Duty?
To regulate trade, protect domestic industries, and generate revenue.
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Feb 06, 2024
How is Custom Duty determined?
Based on the value, weight, or quantity of imported or exported goods.
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Feb 06, 2024
Is Custom Duty always charged?
It depends on trade policies; some goods may be exempt.
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Feb 06, 2024
What is Excise Duty?
Excise Duty is a tax on certain goods produced, sold, or consumed within a country.
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Feb 06, 2024
What products are typically subject to Excise Duty?
Commonly on alcohol, tobacco, and fuel.
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Feb 06, 2024
Can individuals claim back Custom Duty?
Under certain conditions, such as re-exporting goods.
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Feb 06, 2024
Are there legal ways to reduce Custom Duty?
Yes, through trade agreements or duty relief programs.
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Feb 06, 2024
How does Custom Duty affect international trade?
It can influence trade patterns and competitiveness.
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Feb 06, 2024
What is Custom Duty?
Custom Duty is a tax on goods when they cross international borders.
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Feb 06, 2024
Does Custom Duty vary internationally?
Yes, it depends on international agreements and the nature of goods.
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Feb 06, 2024
Can Excise Duty impact product pricing?
Yes, it can increase the retail price of products.
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Feb 06, 2024
Are exports subject to Excise Duty?
Typically no, Excise Duty is for domestic consumption.
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Feb 06, 2024
Is Custom Duty a significant revenue source?
Yes, especially for countries with substantial import-export trade.
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Feb 06, 2024
Does Excise Duty apply to services?
Generally, it applies to goods, but some services may be included.
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Feb 06, 2024
Does Excise Duty apply to imported goods?
Only after they enter domestic circulation.
Shumaila Saeed
Feb 06, 2024
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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