Types Of Customs Duty In India

Types Of Customs Duty In India

Customs duties in India are essential taxes levied on goods crossing international borders, regulating imports and exports. These duties play a crucial role in safeguarding domestic industries, supporting government policies by strategically taxing or restricting imports, thereby fostering local industries, promoting manufacturing, and addressing trade imbalance. The revenue generated from customs duties contributes significantly to funding essential public services, government projects, and overall economic growth. In this blog, let us explore the diverse types of customs duties and take a closer look at the process of calculating and paying them online in India.

1. Basic Customs Duty (BCD)

In India, the most prevalent customs duty is the Basic Customs Duty (BCD), which is imposed on all imported goods as a percentage of their assessable value. This value is determined by adding the cost of the goods, freight charges, and insurance fees. BCD rates are not fixed and can vary depending on the country of origin and the nature of the imported goods.

2. Countervailing Duty (CVD)

To ensure fairness in trade, the Central government enforces Countervailing Duty (CVD), an import tariff on goods brought into India. This tariff aims to counterbalance any subsidies provided to producers in the exporting nation. Typically, the duty amount matches the subsidy granted to the exporter, thus leveling the economic playing field.

3. Additional Customs Duty

Additional Customs Duty, alternatively known as Special Countervailing Duty (CVD), operates in tandem with Central Excise Duty, which is levied on goods produced within India. Its primary objective is to maintain fairness in the market by preventing imported goods from gaining an undue edge over domestically manufactured ones. This duty serves to balance the scales, ensuring a level playing field for all goods, regardless of their origin.

4. Protective Duty

Protective duties aim to shield indigenous or budding industries from external competition. These duties are often prescribed by the Indian Government following extensive assessments of market dynamics, competitive scenarios, and the potential impact on local businesses.

5. Anti-Dumping Duty

Large manufacturers from overseas export their goods at notably lower prices than those found in the domestic market. This practice, known as dumping, can serve to undercut the domestic industry or to clear excess stock. To counteract this, the Central Government has the authority, as specified in section 9A of the Customs Tariff Act, to levy anti-dumping duties on such imported articles up to the margin of dumping if they are sold below their normal value. This enforcement is by the World Trade Organization’s (WTO) regulations. It is crucial to note, however, that anti-dumping measures can only be implemented if an Indian industry manufactures similar products.

6. Education Cess on Custom Duty

In addition to the total customs duty, there’s an extra charge known as the education cess. It amounts to 2% of the calculated customs duty, while an additional 1% is allocated for secondary and higher education cess. These funds play a crucial role in fostering the development of India’s education sector.

7. National Calamity Contingent Duty

The·National Calamity Contingent Duty (NCCD) serves to accumulate resources for rapid deployment during natural disasters or significant national emergencies. This levy, calculated as a percentage of the value of imported goods, is determined by the government and can vary based on the type of commodity and current societal or environmental priorities.

8. Safeguard Duty

The government imposes safeguard duties when there’s a sudden surge in imports of a specific product, often triggered by import tariff reductions or commitments made to the World Trade Organization (WTO). These duties provide domestic producers with a temporary window to enhance their competitiveness.

9. Social Welfare Surcharge on Imported Goods

The Social Welfare Surcharge is implemented to replace the Education Cess and Secondary and Higher Education Cess on customs duties. Its primary objective is to generate funds for the government’s various social welfare endeavors, spanning healthcare, education, and poverty alleviation.

How To Calculate Customs Duty In India?

Determining custom duties in India involves the assessment of duties based on either specific rates or ad valorem rates, which are calculated according to the value of the imported goods. This valuation is conducted by the Customs Valuation (Determination of Value of Imported Goods) Rules of 2007. When uncertainties regarding the declared value of goods arise, the valuation process employs distinct methods.

  • Comparative Value Method (Rule 4 & 5)

This method compares the transaction value of identical or similar items to determine the appropriate value.

  • Deductive Value Method (Rule 7)

The sale price of the imported goods in the importing country is used as a basis for valuation.

  • Computed Value Method (Rule 8)

This method involves calculating the value based on costs associated with materials, fabrication, and profit in the country of production.

  • Fallback Method (Rule 9)

This method provides flexibility by incorporating elements from previous methods when necessary.

How To Pay Customs Duty Online?

Paying customs duty online has never been simpler, with the seamless integration of the internet and specialized portals. Here is your step-by-step guide to efficiently managing your customs duty payments on the ICEGATE platform.

1. Visit the official website of the Indian Customs Electronic Data Interchange Gateway (ICEGATE) at https://www.icegate.gov.in/.

2. Access your account by entering your import or export code or logging in with your ICEGATE credentials.

3. Head to the ‘Financial Services’ tab and choose the “e-payment” option to locate your outstanding tax challan.

4. Specify the ‘Duty Type’, ‘Document Type’, and ‘Location’, and provide the ‘Identification Number’ as required.

5. Input your ‘ICEGATE USER ID’ and ‘Password’ to proceed.

6. Complete the verification step by entering the displayed ‘Captcha’ and clicking ‘Verify & Proceed’.

7. Review the list of unpaid challans and select the relevant one for payment.

8. Opt for ‘South Indian Bank’ under the ‘Net Banking’ section and proceed to ‘Make Payment’.

9. Double-check the accuracy of the ‘Challan Details’ before clicking ‘Pay’ using SIBerNet.

Frequently Asked Questions

Yes, they can. If you don’t pay the taxes and duties, Customs can hold onto your shipment.

Customs duty exemption grants the Central Government of India the authority to waive customs duties on certain items as outlined in the Customs Act of 1962. This provision is typically applied to goods of strategic significance, confidential nature, or those intended for charitable purposes.

CIF, standing for Cost Insurance Freight, represents the total amount paid by the importer to the exporter when the goods are unloaded from the ship at the port. This value comprises the cost of the goods, the freight expenses for transporting them, and the insurance costs required for the goods’ delivery to the port.

Yes, the Indian government offers several options for rebates on export customs duties.

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