What Is State Excise Tax? (Solved)

An excise tax is a legislated tax on specific goods or services at purchase such as fuel, tobacco, and alcohol. Excise taxes are intranational taxes imposed within a government infrastructure rather than international taxes imposed across country borders.

What is meant by excise tax?

Excise taxes are taxes that are imposed on various goods, services and activities. Such taxes may be imposed on the manufacturer, retailer or consumer, depending on the specific tax.

Which is an example of an excise tax?

Excise taxes are most often levied upon cigarettes, alcohol, gasoline and gambling. These are often considered superfluous or unnecessary goods and services. To raise taxes on them is to raise their price and to reduce the amount they are used. In this context, excise taxes are sometimes known as “sin taxes.”

What is state excise duty?

State excise duty under GST Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called “State Excise” duty. For most of the states, excise duty is the second largest tax revenue after sales taxes (state VAT).

Who will pay excise taxes?

Excise taxes are primarily taxes that must be paid by businesses, usually increasing prices for consumers indirectly. Excise taxes can be ad valorem (paid by percentage) or specific (cost charged by unit).

Why do we need excise taxes?

Excise taxes can be used to price an externality or discourage consumption of a product that imposes costs on others. They can also be employed as a user fee to generate revenue from people who use particular government services, revenue which should be used to maintain that government service.

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What’s the difference between sales and excise tax?

Sales tax applies to almost anything you purchase while excise tax only applies to specific goods and services. Sales tax is typically applied as a percentage of the sales price while excise tax is usually applied at a per unit rate.

Are excise taxes deductible?

The federal government charges excise taxes on the sale or use of a wide variety of products. An excise tax isn’t deductible if it’s for a personal expense. You can deduct as a business expense excise taxes that are ordinary and necessary expenses of carrying on your trade or business.

How do you calculate excise tax?

To calculate excise tax, multiply the per year amount by each thousand dollar of the MSRP. For example, the first year excise tax for a vehicle with an MSRP of $30,000 would be $720 ($24 x 30). Excise tax for the second year of the vehicle would be $525 ($17.50 x 30).

What are the two types of excise tax?


  • Specific Tax – refers to the excise tax imposed which is based on weight or volume capacity or any other physical unit of measurement.
  • Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles.

Who pays excise tax on insurance premiums?

The federal excise tax (FET) is imposed at the federal level on insurance premiums or reinsurance premiums that are paid by a US person to a foreign non-US person with regard to US risks.

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What states have no excise tax?

Most states have sales tax to help generate revenue for its operations – but five states currently have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

What is the difference between income tax and excise tax?

Income tax is charged on the personal income of individuals. Excise duty is charged on goods that are produced or made in factories. Income tax is charged only for those who earn above a certain amount. Excise duty is charged on all factory goods.

Is excise tax the same as GST?

Excise taxes and excise duties apply to the goods before the GST/HST is added on. Excise duties are imposed on beer, wine, spirits, tobacco products and cannabis products produced in Canada.

What is difference between income tax and excise duty and GST?

Currently Excise duty is levied on only manufacture. While GST will be levied from manufacture till the sale of goods to the customer. GST will levied on goods and services also. Today excise is levied on goods and VAT is levied on value of goods plus Excise, which leads to double taxation.

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