Published Paper Details:

Excise duty must be paid before the goods are cleared from the factory. Small-scale industries enjoy exemption from excise tax up to the specified value of goods cleared. The two controlling factors in the shifting of a customs duty, then, are the elasticity of demand, and the elasticity of supply. If the demand were absolutely inelastic, then the importer could continue to import as many goods as before, and sell them at a price, increased by the amount of the duty. The average percentage change of 0.513 percent in Customs Duty for 1 percent change in value of exports and imports indicating that the tax buoyancy of Customs Duty for the study period is not high and not as significant as excise duty. Broadening the base of both central and state taxes and keeping the tax structures simple within the administrative capacity of the governments is an important international lesson that has to be takennote of in calibrating further reforms.