The Centre is preparing to repeal the Central Excise Act, 1944 in the upcoming Budget, replacing the 80-year-old statute with a modernised law aligned with the Goods and Services Tax (GST) framework. Government sources said the proposed legislation is expected to be tabled as part of a wider clean-up of legacy tax laws.
A government source familiar with the development described the move as long overdue. “We are repealing it. The Central Excise Act is a pre-Constitution law, and it simply does not match today’s tax environment. We want to modernise it fully,” the source told Moneycontrol.
“Once we repeal the old statute, we will re-enact a completely new Central Excise Act. The entire framework – rules, procedures, everything – is being rebuilt. The idea is to align the new Act with GST processes. Excise today applies to only six products, so the administration must reflect that contemporary structure,” he added.
Officials clarified that this is not an expansion of excise. The duty will continue to apply only to crude petroleum, motor spirit (petrol), high-speed diesel, aviation turbine fuel (ATF), natural gas, and tobacco and tobacco products. The modernised law is intended to create a specialised, streamlined framework for this narrow set of excisable goods.
Mirror GST architecture
The new law seeks to streamline the administrative backbone of excise, which has become fragmented over decades of piecemeal amendments. “There are many obsolete provisions. The law has been amended many times – from rate changes to administrative tweaks under successive Finance Acts – and everything is now scattered across rules, appeals, and notifications. We are consolidating all of it into one concise, modern statute,” the source said.
The objective is to bring uniformity in registration, assessment and compliance procedures for excisable goods, mirroring the digital workflows already standard under GST. Currently, businesses must register separately for excise duties, often using paper-based systems, while assessments follow multiple manual formats and notifications for different products. Compliance requires maintaining physical records and navigating separate rules for appeals and registrations.
The new law will consolidate all these processes into a single digital architecture, enabling online registration, return filing, electronic audit trails, and a coherent system for assessments and appeals. This is expected to simplify compliance, reduce administrative burdens, and improve transparency.
The move follows the government’s announcement last year of plans to replace the Income Tax Act, 1961 with a new direct tax code-style framework, strengthening expectations of a comprehensive overhaul of legacy indirect tax laws. “We are aiming for a structure that is simple, technology-compatible and free of legal clutter,” the source said.
Central Excise Act, 1944
The Central Excise Act, 1944 is a pre-Independence statute governing duties on the manufacture of goods. Before GST, excise duty applied across a wide range of manufactured products. After GST’s introduction in 2017, excise duties were restricted to the six categories mentioned above, but the law still contains legacy provisions such as physical record-keeping requirements, old licensing systems, and penalty structures designed for a manufacturing-centric regime.
The proposed new Act will replace the legacy framework with GST-aligned digital workflows, enabling taxpayers to register, file returns, and make payments through integrated online systems rather than relying on multiple notifications and manual processes. Obsolete licensing and record-keeping requirements will be removed, while appeals, assessment, and compliance procedures will be consolidated under a single, coherent framework. The aim is to reduce compliance complexity, make monitoring more transparent, and bring excise administration fully in line with the technology-driven systems already standard under GST.
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