For every good imported and some exports, the Government of India charges an amount. This charge is a form of indirect tax and is known by custom duty. When import goods are charged with tax, it is called import duty, while the tax on exported goods is called export duty.

Central Board of Excise and Customs (CBEC),

In India, the custom duty falls under the Customs Act, 1962. The act was meant to give the government the right to levy a charge on imports and exports, stop imports and export, levy penalties, etc.

Central Board of Excise and Customs (CBEC), under the Department of Revenue of the Ministry of Finance, is the body in charge of the custom duty. The policies for the collection, levying of custom duty, evasion from custom duty, administrative decisions in relation to custom formations, smuggling prevention are made by the CBEC. The CBEC also has its own divisions, like the Central Revenues Control Laboratory and Directorates, Commissionerate of Customs, etc.

The Levy Of Custom Duty

Custom duties are levied almost on everything imported into the country, while export duties are levied only on some goods. However, goods like foodgrains and fertilizers are not charged any import duties. Import duties are classified further under divisions-
  1. basic custom duty
  2. additional customs duty
  3. protective duty
  4. anti-dumping duty
  5. safeguard duty.
The amount of custom duty depends upon factors such as value, dimensions, etc. Duties levied based on weight or quantity are called ‘Specific Duties’, while value-based charges are called ‘Ad Valorem Duties’. If duties are laid based on a combination of multiple factors and value, then they are called ‘Compound Duties’.

In India, custom duties are evaluated on the basis of Ad Valorem (the value of the goods) or Specific basis. Rule 3(i) of Customs Violation (Determination of Value of Imported Goods) Rules, 2007 determines the value of goods.

How Is Custom Duty Calculated?

Every import is subject to duty, and there are aspects that determine the charge. Read on to find out the import duty calculator in brief.
  1. The first duty levied is basic customs duty. It is levied as a specific rate on the unit or as ad valorem
  2. 10 per cent social welfare surcharge is levied on the value of goods.
  3. IGST is levied, which is a combination of factors such as BCD, social welfare surcharge and the entire value
  4. Levy of GST Compensation cess
  5. For some imports, even anti-dumping duty is levied
  6. The government may also levy safeguard duty to protect domestic industry from any threat
  7. Finally, every import will be charged 1 per cent of customs handling fee
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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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