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Custom Duty in India: Know Types, Calculator, Rates, Payment Research Team | Posted On Tuesday, February 05,2019, 03:35 PM

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Custom Duty in India: Know Types, Calculator, Rates, Payment



What is Custom Duty?

Customs duty is a kind of indirect tax imposed on goods when transported across International borders. The purpose of Customs Duty is to protect each country's economy, citizens, jobs, environment, by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country.

Customs duty is imposed on goods as a means of revenue generation as well as protects the country’s trade and small industries from international competitors. The custom duties imposed on the goods depend on certain criteria like weight, dimension and value of the goods.

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Custom Duty in India:

Central Board of Excise and Customs (CBEC) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with tasks of formulation of policy concerning levy and collection of Customs and Central Excise duties, prevention of smuggling and administration of matters relating to Customs, Central Excise and Narcotics to the extent under CBEC's purview. The collection of Customs duties on imports and exports in India are carried out as per the Customs Act, 1962 and the Customs Tariff Act, 1975

Types of Custom Duty:

Listed below are the different types of customs duties:

  • Basic customs duty: Imported goods are levied with Basic Customs Duty, BCD, on the assessable value. Basic Duty is a type of duty or tax imposed under the Customs Act (1962). The duty may be fixed on specific rate basis. The Central Government has the power to reduce or exempt any good from these duties.
  • Education CESS: This is a tax that is levied by the Government to finance basic education in India. The CESS is levied at 2% and an additional 1% of the aggregate of the customs duties.
  • Countervailing duty: This is a type of additional customs duty levied on goods that fall under Section 3 of the customs tariff act, 1975. It is the same as central excise duty levied on smaller goods produced in India.
  • Protective duty: Protective tariffs are taxes or duties placed on foreign goods by a national or state government in order to protect domestic products and markets.
  • Safeguard duty: The safeguard duty is a type of tax, which aims to safeguard against the rise in exports. The safeguard taxes are levied on goods when the government feels that the rise in exports can damage the existing domestic market.
  • Anti-dumping duty: Dumping means exporting goods in a foreign market at a price which is less than cost of production or below their "fair" market value. Dumping gives hard competition to a domestic goods manufacturer. So, to counteract this dumping, the Indian government has formulated certain guidelines and policies. Imposing duty on imported goods is one of them and is known as Anti-Dumping Duty.

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GST for Exporters:

With the recent GST taxes that are imposed on all goods and services, the exporter has an option to pay for IGST on the goods to be exported and then claim refunds on the same. The exporter charges IGST on the invoice for export at applicable rates. The rates are presented in a chart and the Custom duty rate varies across items. Under GST, the exporter is offered the following benefits:

  • Export under bond without payment of tax.
  • Export along with tax payment and claim refund later.

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Calculating Customs Duty:

Customs duties are calculated on the value of goods on specific rate basis. The value of the goods are determined by the rule 3 (j) of the custom valuation rules 2007. The rule pegs the value of the imported goods at the transaction value that has been adjusted according to the provision under rule 10.

If there is no significant or objective data regarding the valuation factors, then the valuation conditions are not satisfied. So the valuation of items has to be done through other means as per the following hierarchical system:

  • Comparative Value Method which compares the transaction value of similar items (Rule 4).
  • Comparative Value Method which compares the transaction value of similar items (Rule 5).
  • Deductive Value Method which uses the sale price of item in importing country (Rule 7).
  • Computed Value Method which uses the costs related to fabrication, materials and profit in production country (Rule 8).
  • Fallback Method which is based on the earlier methods with higher flexibility (Rule 9).

Customs Duty Online:

Online customs duty can be accessed through the ICEGATE or Indians customs electronic commerce/electronic data interchange gateway. This portal enables users pay Custom Duty through E-filing services using ICEGATE e-Payment Gateway.

The facilities provided by this portal are payment of bills of entry, shipping bills or multiple challans, in a single transaction. This portal is very useful for airline and shipping agents, who file their manifests. Any person who has net banking facility in the designated bank can make Online Custom Duty payment.

This portal allows e-filing services to clients of Customs Department including trade and cargo carriers, collectively known as Trading Partner.  Apart from e-filing, this portal allows e-payment, document tracking, online registration for IPR, IE code status, verification of DEPB/EPCG/DES licenses, PAN based CHA data and so on. There is a 24x7 helpdesk for all the trading partners to resolve issues and collect information.

Payment of Custom Duty:

The ICEGATE payment process is given below in detail:

  • Visit the Icegate online portal.
  • Enter the ICE code.
  • Select the location code.
  • Click on e-payment.
  • Click on the banks list to see the list of banks associated with icegate e-payment gateway.
  • On clicking submit, the following page will be displayed.

You get to see the Unpaid Challans. On the left side of the above page, you can find the menu options like Unpaid Challans, Incomplete Transactions, and Transaction Summary.

  • Click on the check box to select Challans and click on ‘Pay’ button to proceed with the Custom Duty Payment. 
  • You can reset the selected Challans by clicking on Reset button.
  • List of selected Challan is displayed on the screen.
  • Click on confirm button.
  • The next page appears where you can select the Bank.
  • Select Bank from the List of Banks.
  • After selecting a bank, you will be redirected to the Bank portal for Icegate e-Payment.
  • Complete the transaction with the bank gateway.
  • After the completion of a transaction, you will be redirected to the ICEGATE Portal.

After completing the transaction on the bank portal, you will be re-directed to ICEGATE transaction status page. Depending on success or failure of the transaction, respective screens are displayed. It is advised to visit this site between 4AM to 9PM only. Users having accounts with other banks are advised to use the old ICEGATE e-payment gateway by clicking on the link given on the first page of the e-payment portal.

Custom Duty Calculator:

A user can use the custom duty calculator to calculate the amount of duties or taxes to be paid. The duties can be paid online through the e-payment portal of ICEGATE.

Using the customs calculator is easy. All you have to do is enter the CTH code of the goods that are scheduled to be imported. Add a description of a maximum of 30 characters in the specified box and select the country of origin.

Click on the search tab to select the list of goods. A list appears. You have to choose your product from the list. A next chart appears containing relevant information on your product. Thereafter in the dynamic chart, you can enter the values, to check the exact custom duties that are to be paid.

Custom Duty Rates:

The rates are either specified or on ad valorem basis. The custom duties rates generally vary from 0% to 150% and the average rate is 11.90%. There are other types of fees that are applicable to custom duty:

  • Lending charge: 1% of CIF
  • Countervailing duty: 0%, 6% or 12%
  • Education and higher education CESS: 3% of CVD
  • Additional CVD of 4%.

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