The tax levied on commodities when they are carried across international boundaries is known as customs duty. In simple words, it is a tax levied on items imported and exported. This duty is used by the government to increase revenue, protect domestic industries, and regulate the movement of products. Custom Duty rates differ based on where the goods were produced and what materials they were comprised of.
Note: Beginning July 1, 2017, Customs Duty was replaced by the Goods and Services Tax (GST).
What is Custom Duty?
All imports into India, as well as some exports, are subject to customs duties imposed by the Indian government. The amount of customs duty to be paid depends on a number of criteria, including the items worth, measurements, weight, and so on. Custom Duty is a type of Indirect Tax that applies to all imported items as well as a few goods exported out of the country. Import duties are referred to as import duties, whilst export duties are referred to as export duties.
Customs charges on the import/export of commodities are levied by nations all over the world to raise income and/or protect indigenous institutions from predatory or efficient foreign competition. Customs tax is calculated based on the value of the items, as well as their dimensions, weight, and other characteristics. Ad valorem duties are those that are based on the worth of commodities, whereas specific duties are those that are based on quantity or weight. Compound duties on items are based on a combination of price and other variables.
What is Custom Duty in India?
The Customs Act of 1962 defines customs duty in India, allowing the government to levy duties on exports and imports, restrict the export and import of products, establish processes for importing and exporting goods, and impose penalties, among other things. The Central Board of Excise and Customs is responsible for all matters pertaining to it (CBEC). The CBEC, in turn, is a section of the Ministry of Finance’s Department of Revenue. CBEC develops policies linked to customs duty collection and levying, smuggling prevention, customs duty evasion, and administrative judgments involving customs formations.
Commissionerate of Customs, Customs (preventive and Central Excise Zones, Customs, Central Revenues Control Laboratory, and Directorates, and others are among the CBEC divisions that handle fieldwork. The CBEC is also in charge of overseeing correct tax administration for both international and domestic travel.
Updates on Customs Duties in Budget 2021
Basic customs duties have been restructured significantly in Budget 2021-22 to support domestic production and assist India to join the global value chain. Any new customs duty exemption will be effective for two years from the date of issuance, according to the budget, indicating that no exemption or protection for the home industry may last indefinitely.
Nirmala Sitharaman, the Finance Minister, has unveiled the Union Budget 2021, implemented on February 1, 2021. The Finance Minister announced a few modifications to customs duty in his most recent budget speech. The following ideas have been proposed:
- The rationalization of the customs duty structure will result in the elimination of outmoded exemptions.
- Customs charge on precious metals such as gold and silver is being reduced. For both metals, the tariff has been reduced to 7.5 percent from 12.5 percent previously.
Custom Duty through Online Mode
ICEGATE offers online customs duty. All trading partners have access to a 24-hour help desk to resolve issues and gather data. This portal provides E-Filing services to Customs Department clients, such as trade and cargo carriers, referred to as Trading Partners. Through FTP, e-mail, and web-upload, ICEGATE provides services such as Shipping Bills, Electronic filing of Bills of Entry, and other related messaging between customs and the trading partner.
Manifests can be filed by shipping and airline agencies, and cargo logistics and custodians can connect with customs EDI for logistics and cargo-related information. Besides e-filing, this portal supports e-payment, document tracking, online IPR registration, IE code status, DEPB/EPCG/DES license verification, PAN-based CHA data, and more.
Payment of Customs Duties Online
Following the methods outlined below, you can pay your customs duty online:
- Use the ICEGATE e-payment Portal to make a payment.
- ICEGATE will provide you with an import/export code or a login credential. Enter that code.
- Select e-payment
- You can now see all of your outstanding challans.
- Choose a bank or payment method, and pick the challan you want to pay.
- You will be transferred to the payment portal of the specific bank.Now,Pay the amount.
- You will be routed to the ICEGATE portal, where you can print a copy of your payment.
Custom Duty Types
Almost all items brought into the country are subject to customs taxes. A few commodities are subject to export duties, as listed in the Second Schedule. A few commodities, such as fertilizers, life-saving pharmaceuticals and equipment, and food grains, are exempt from import tariffs.
Basic duty, Additional Customs Duty, True Countervailing Duty, Protective Duty, Education Cess, and Anti-Dumping Duty or Safeguard Duty are the several types of Import Duties.
- Basic Custom Duty: Basic custom duty is imposed on imported goods that come under Section 12 of the 1962 Customs Act. These duties are imposed at the rates set forth in the First Schedule to the Customs Tariff Act of 1975, and are subject to the conditions set forth in Section 2 of the act. Depending on the country of import, the charged rates may be standard or preferential.
- Protective Duty: A tariff commissioner-recommended rate of protective duty may be levied to protect domestic industry from imports.
- Additional Customs Duty (Countervailing Duty (CVD)):Section 3 of the Customs Tariff Act of 1975 imposes an additional customs duty (countervailing duty (CVD)) on imported goods. It is the same as the Central Excise Duty charged on similar commodities manufactured in India. This tax is based on the whole worth of the items, including BDC and landing fees.
- Education Cess: This duty is 2% of total customs duties, with a higher education cess of 1% of total customs duties.
- Safeguard Charge: If the government believes that a rapid surge in exports may harm the domestic industry, it will levy a safeguard duty.
- Anti-dumping: Anti-dumpingduty may be applied if a good is imported at a lower price than the fair market price, and is restricted to the difference between the export and normal prices (dumping margin).
Calculations for Custom Duty
Customs duties are based on the value of commodities and are calculated on a particular or ad valorem basis. Rule 3(i) of the Customs Valuation (Determination of Value of Imported Commodities) Rules, 2007 determines the value of goods.
This rule sets the price of imported products at the transaction price, which has been adjusted in accordance with Rule 10.
If no quantitative or objective data is available for the valuation components, the valuation conditions are not met, or there are issues about the correctness or truth of the proclaimed value, as per Rule 12 of the Valuation Rules 2007, valuation of objects must be done using other methods as outlined below.
- The Comparative Value Method examines the transaction value of things that are similar (Rule 4)
- The Comparative Value Method examines the transaction value of things that are similar (Rule 5)
- The Deductive Value Method is based on the item’s sale price in the importing country (Rule 7)
- The Computed Value Method is based on fabrication, material, and profit costs in the country of manufacture (Rule 8)
- The Fallback Method is a more flexible version of the prior approaches (Rule 9)
E-Sanchitor e-storage and Computerized Indirect Tax Documents Handling were launched in an effort to automate India’s taxation system. This system was launched by the Central Board of Indirect Taxes and Customs (CBIC). The eSanchit tool is available to ICEGATE registered importers and exporters in India. E-Sanchit facilitates cross-border trade by allowing customs-related papers to be completed online.It enables the uploading of supporting papers as well as the processing of customs paperwork without the use of paper.Importers/Exporters can do so by going to the ICEGATE website’s eSanchit portal (https://www.icegate.gov.in/eSANCHIT.html).
Indian Customs Electronic Gateway for Indian Customs and Central Excise. Clients of the Customs and Central Excise Department can use this service to file electronic documents. The CBIC has expanded the eSanchit facility to Participating Government Agencies (PGA) as well, allowing them to issue relevant clearances to importers and exporters in certificate format via the online uploading of documents. eSanchit eliminates the requirement for assessing officials to get hard copies of documents.
Calculate Custom Duty
The custom duty calculator is available on the Indian Customs Electronic Gateway (ICEGATE) website.
- After you’ve accessed the calculator, you’ll need to enter the HS Code (CTH Code) of the item you want to import.
- Now, enter a description that is no more than 30 characters long and choose the country of origin (for antidumping or preferential duty).
- When you click Search, a list of items that match your search parameters will appear. Once you’ve chosen one, you’ll be able to see a chart with all relevant information about the customs duty on the item you’ve chosen.
- This is a dynamic chart where you may enter values to determine the precise amount of customs duty you must pay.
Customs Duty Latest Rates
The following are the most recent Basic Customs Duty (BCD) tariff rates:
|Item||Tariff Code (HSN)||Basic Customs Duty (From)||Basic Customs Duty (To)|
|Bath, shower bath, sink, washbasin, etc., made of plastic||3922||10||15|
|Aviation turbine fuel||2710 19 20||0||5|
|Compressors for refrigerators and air conditioners||8414 30 00/8414 80 11||7.5||10|
|Colored gemstones which are cut and polished||71||5||7.5|
|Diamonds which are lab-grown||71||5||7.5|
|Diamonds that are broken, half-cut, or semi-processed||71||5||7.5|
|Jewelry articles and their parts, either of metal clad with precious metal or of precious metal||7113||15||20|
|Footwears||6401 to 6405||20||25|
|Plastic stuff for packing and conveyance like cases, bottles, insulated wares, containers, etc.||3923|
In India, what is the customs duty on mobile phones?
In India, a 10% service welfare cess is added to the existing 20% basic customs duty on mobile phones. Mobile chargers and motherboards are subject to a 20% customs levy.
What is the purpose of the ICEGATE portal?
The ICEGATE is the Central Board of Excise and Customs’ e-Commerce Portal. It offers cargo and trade carriers services such as e-filing. Importer and exporter services are also available here.
What exactly do you mean when you say “custom duty issue”?
It is a type of tax put on imports by a country’s customs authority in order to raise revenue and safeguard home industry from foreign competitors.
What is the definition of a Basic Customs Duty?
The Customs Act of 1962 imposes a sort of tax known as basic customs duty. The basic customs duty imposed varies by item, and the Indian government reserves the authority to exempt or lower any item from paying the basic customs duty.
What factors have an impact on customs duty?
The worth of the items, their dimensions, weight, and other characteristics all influence customs duty.
In India, where can I pay customs duty?
You can pay your customs duty by going to the ICEGATE website and logging in with your login credentials. You’ll see an e-payment link; click it and choose a payment method. Then you can finish paying your customs charge by following the steps.
How is ad valorem different from Specific duties?
Specific duties are collected on the basis of the quantity or weight of products, whereas ad valorem charges are levied on the basis of the value of goods.
What does it mean to have a compound duty?
A compound duty is a form of import tax that incorporates both specified as well as ad valorem duties. As a result, it is calculated based on the worth of the items as well as the weight or quantity.
What does it mean to be exempt from customs duties?
Under the Customs Act, 1962, the Central Government of India has the authority to refuse to impose any custom duty on a specific item. This can be done for legitimate reasons that are strategic or secret in nature, or for charity objectives.