Customs Duty is a type of indirect tax which is applicable on all goods imported into India. In India, the customs duty is governed by the Customs Act, 1962. Department of Revenue in the Ministry of Finance is responsible for levying customs duty in India.

Two of the most important reasons for collecting custom duty on the imported items are:
  • It creates extra revenue for the government.
  • It gives domestic manufacturers an edge over foreign competitors.

Basic Customs Duty

All imported goods falling under Section 12 of the Customs Act 1962 have to pay the Basic Customs Duty (BCD). While calculating BCD, the Customs department considers an estimated value of the imported item.

Integrated Good and Service Tax on Imports

Indian government earlier used to levy different components of custom duty apart from the BCD as per the economic condition of the country. This would include duties like Countervailing Duty, Protective Duty, Safeguard Duty, Anti-dumping Duty, etc. However, with the implementation of the Goods and Service Tax across the country, imports also came under the ambit of this tax system.

For all the imports, an IGST (Integrated Good and Service Tax) is now charged. This IGST is charged on the cumulative value of the product, including the customs duty. However, the importer can claim the input tax credit for the IGST paid.

How is Customs Duty Calculated in India?

Calculation of customs duty depends on several factors like its market value, weight, dimensions, etc. While the value of the item is the main criteria for calculating customs duty, it might not always be possible to determine the value of the goods quantitatively.

Additionally, the declared value of the item can be sometimes intentionally reduced to save the customs duty. In such cases, the valuation of goods is done indirectly in the following order:
  • Estimation of the item's value by comparing with the price of similar items.
  • Determination of the value of the item from its sale price in the originating country.
  • Calculating the value of the item from the material and fabrication costs of its components.

Custom Duty Calculator:

It might be confusing to read different sections and find applicable rules to determine the customs duty for a particular item. An online custom duty calculator can help you simplify this process by taking care of all these parameters automatically.

In such a calculator, you can select the country of origin and type a few characters of the item name. The calculator then lists all the items that match your search criteria. Once you select an item from the list, a dynamic chart shows the applicable custom duty rates for the selected item.

Keep it Simple While Calculating the Customs Duty

Calculating customs on your imports can be overwhelming, especially for the new traders. However, the process is now fairly simple if you take time out to educate yourself. Moreover, you can pay duty online too using the ICEGATE portal.

Click here to visit our personalized online advisor that gives you the financial expertise you need.

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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