The Government of India imposes a Custom Duty on all the imports within the country and some of the exports from the country. The amount which is to be paid as custom duty can be determined by several factors such as value, weight, dimensions, etc. of the item in question.
What do you mean by Custom Duty?
Custom duty is a type of Indirect Tax and is applicable on all the goods imported and a few goods which are exported out of the country. Duties imposed on import of goods are termed as Import duty while duties imposed on exported goods are termed as Export duty. Countries around the world impose custom duties on import/export of goods as a means to increase revenue and/or shield domestic institutions from predatory or efficient competitors from other countries.
Customs duty is imposed as per the value of goods or dimensions, weights and other such criteria according to the goods. If duties are based on the value of goods, then they are called as Ad valorem duties, while quantity/weight based duties are called Specific duties. Compound duties on goods are a combination of value as well as various other factors.
Custom Duty in India
Custom duty in India is explained under the Customs Act, 1962 and enables the government to impose duty on exports and imports, prohibit export and import of goods, procedures for the importing/exporting and offences, penalties etc. All matters related to the custom duty fall under the Central Board of Excise & Customs(CBEC). The CBEC, is a division of the Department of Revenue of the Ministry of Finance. CBEC formulates policies that concern collection or imposing of custom duties, custom duty evasion, smuggling prevention and administrative decisions related to the customs formations.
CBEC has different divisions that take care of the field work including the Commissionerate of Customs and Directorates etc. CBEC also looks after proper tax administration for foreign and in country travel.
Types of Custom Duty
Custom duties are imposed almost universally on all the goods imported into the country. Export duties are imposed on a few goods as specified under the Second Schedule. Import duties are not imposed on a few items including lifesaving drugs/equipment, fertilizers, food grains etc. Import duties are further more divided into basic duty, additional customs duty, true countervailing duty, protective duty, education cess and anti-dumping duty or Safeguard duty.
Basic Custom Duty:
Basic custom duty is only applicable on imported items that falls under the ambit of Section 12 of the Customs Act, 1962. These duties are imposed at the rates prescribed in the First Schedule to Customs Tariff Act, 1975, under the terms specified in Section 2 of the act. The imposed rates may be standard or preferential as per the country of import.
Additional Customs Duty (Countervailing Duty (CVD)):
This duty is imposed on imported items which comes under Section 3 of Customs Tariff Act, 1975. It is equivalent to the Central Excise Duty that is imposed on similar goods produced within our country. This duty is calculated on the aggregate value of goods including BDC and landing charges.
Protective duty may be levied to shield the private industry against imports at a rate which is recommended by the Tariff Commissioner.
This duty is imposed at 2% and higher education cess at 1% of aggregate of customs duties.
Anti-dumping duty may be levied if the good being imported is below fair market price, and is limited to the ultimate difference between export and normal price which is known as Dumping Margin.
Safeguard duty is imposed if the government feels that a sudden increase in exports can potentially damage the private industry.
Custom Duty Payment Online:
Custom duty can be paid online by following the steps which are given below:
- Access the ICEGATE a e-payment portal.
- Enter Import/Export code or login credential which are supplied by ICEGATE.
- Click on the e-payment.
- You can now see all the unpaid challans on your name.
- Select the challan which you want to pay and select a bank or payment method.
- You will be redirected to the particular banks payment gateway.
- Make the payment.
- You will be redirected to the ICEGATE portal, click print to save the payment copy.
‘Customs Duty’ refers to the tax levied on the goods when they are transported across the international borders. The ultimate objective behind imposing customs duty is to protect each nation’s economy, jobs, environment, citizens, etc., by regulating the movement of goods, especially prohibited and restricted goods, in and out of any country.