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Excise Duty vs. Custom Duty: Know the Difference

Shumaila Saeed
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.
Excise Duty vs. Custom Duty

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.
Shumaila Saeed
Shumaila Saeed
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.
Shumaila Saeed
Shumaila Saeed
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.
Shumaila Saeed
Shumaila Saeed
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.
Shumaila Saeed
Shumaila Saeed
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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Shumaila Saeed
Feb 06, 2024
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Comparison Chart

Tax Type

Domestic
International
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Feb 06, 2024

Levied On

Manufacture, Sale, Consumption
Imports, Exports
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Feb 06, 2024

Purpose

Revenue, Control Consumption
Trade Regulation, Protection
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Calculation Method

Per Unit or Ad Valorem
Value, Weight, Quantity Based
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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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Shumaila Saeed
Jan 24, 2024

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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Shumaila Saeed
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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Shumaila Saeed
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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Shumaila Saeed
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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Shumaila Saeed
Jan 24, 2024

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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Shumaila Saeed
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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Shumaila Saeed
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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Shumaila Saeed
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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Shumaila Saeed
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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Shumaila Saeed
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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Shumaila Saeed
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.
Shumaila Saeed
Shumaila Saeed
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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Shumaila Saeed
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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Shumaila Saeed
Feb 06, 2024

Does Custom Duty vary internationally?

Yes, it depends on international agreements and the nature of goods.
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Shumaila Saeed
Feb 06, 2024

Can Excise Duty impact product pricing?

Yes, it can increase the retail price of products.
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Shumaila Saeed
Feb 06, 2024

Are exports subject to Excise Duty?

Typically no, Excise Duty is for domestic consumption.
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Shumaila Saeed
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Is Custom Duty a significant revenue source?

Yes, especially for countries with substantial import-export trade.
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Shumaila Saeed
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.
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Shumaila Saeed
Feb 06, 2024

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About Author
Shumaila Saeed
Written by
Shumaila Saeed
Shumaila 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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