Know About Custom Duty In India

Custom Duty in India

The customs duty act was passed in the year 1952, enabling the government impose taxes on the import and export of goods, prohibit the entry of certain goods in the country, restrict exports and impose penalty in case of smuggling of goods. The central excise is the authoritative body that deals with the formulation of policy, and is responsible for levying and collection of Excise duties and taxes, imposing regulations for prevention of smuggling and administers matters relating to Customs.

Types of Custom Duty:

 Given below are the different types of customs duties:

• Basic customs duty: The basic custom duty, BCD, is imposed on imported articles that fall under Section 12 of the customs duty act 1952. Basic Customs Duty refers to duty or tax imposed under the Customs Act (1962). The duty may be fixed on specific rate basis.
• Education Cess: Education Cess refers to the tax levied by the government to fund basic education. The Cess is levied at 2% and a higher education Cess is levied at 1% of the aggregate of the customs duties.
• Countervailing duty: The countervailing duty is an additional customs duty levied on imported goods that fall under Section 3 of the customs tariff act 1975. This tax is similar to the central excise duty levied on smaller goods produced in India.
• Protective duty: Protective tariffs are levied on foreign goods by the government, to protect and safeguard the interest of the domestic traders and industry against efficient competitors around the World.
• Safeguard duty: The safeguard duty is a type of tax aimed to safeguard 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 the International Market, at a price less than "fair" market value. Dumping makes the market more competitive for the domestic traders and manufacturers. So, to counteract dumping, the Government of India has formulated certain guidelines and policies. Imposing duty on imported goods is one of them and is known as Anti-Dumping Duty.

SEE ALSO:  Custom Duty in India

Custom Duty Calculations:

Customs duties are calculated on the value of goods i.e. specific or ad valorem rate basis. The value of the goods are determined based on rule 3 (j) of the custom valuation rules 2007. The rule pegs the value of the imported goods at the transactions value that has been adjusted according to the provision under Rule 10. So the valuation of the goods is done by following the below mentioned procedure:

• 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).

Custom Duty Payment:

Customs duty can be paid online through the ICEGATE portal. The payment process through the ICEGATE payment portal is discussed below in detail:

• Visit the ICEGATE web portal
• Enter the ICE code
• Select the location code
• Click on e-payment
• Click on the bank list to access the list of banks associated with ICEGATE e-payment gateway
• Select your bank and click on submit
• On clicking submit the following page will be displayed

The page will display the Unpaid Challans. On the left side of the page, you will 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 the Reset button.
• List of selected Challans are displayed on the screen.
• Click on confirm button.
• The next page where you can select the Bank will be displayed.
• 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 would be wise to visit this site between 4 AM to 9 PM only. Users having an account 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:

The custom duty calculator is a tool that helps you calculate the amount of duty or taxes you have to pay. You can pay the customs duty online through the e-payment portal of ICEGATE. Go to the ICEGATE portal and enter the CTH code of the goods that you have planned to import. Add a description of a maximum of 30 characters in the box and select the country of origin.

Click on the search tab if you want to go through the list of goods. As soon as the list appears you can choose your product from the list. A 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 you have to pay.

SEE ALSO:  Custom Duty Calculator

Custom Duty Rates

The rates are either specified or on ad valorem basis. The custom duty 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
• Education cess of 3% CVD
• Additional CVD of 4%.

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