Custom Duty in India Last Updated : 03 Jul 2020

The Government of India levies a Custom Duty on all the imports within and some of the exports from the country. The amount to paid as custom duty can be determined by several factors such as value, weight, dimensions, etc. of the item in question.

Note: Entry Tax has been replaced by the Goods and Services Tax(GST) starting 1 July 2017

Custom Duty
Custom Duty

What is Custom Duty?

Custom duty is a variant of Indirect Tax and is applicable on all goods imported and a few goods exported out of the country. Duties levied on import of goods are termed as import duty while duties levied on exported goods are termed as export duty. Countries around the world levy custom duties on import/export of goods as a means to raise revenue and/or shield domestic institutions from predatory or efficient competitors from other countries.

Customs duty is levied as per the value of goods or dimensions, weight and other such criteria according to the goods in question. 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 defined under the Customs Act, 1962 and enables the government to levy duty on exports and imports, prohibit export and import of goods, procedures for importing/exporting and offences, penalties etc. All matters related to custom duty fall under the Central Board of Excise & Customs (CBEC). The CBEC, in turn, is a division of the Department of Revenue of the Ministry of Finance. CBEC formulates policies that concern collection or levying of custom duties, custom duty evasion, smuggling prevention and administrative decisions related to customs formations.

CBEC has various divisions that take care of the field work including Commissionerate of Customs, Customs, Customs (preventive and Central Excise Zones, Central Revenues Control Laboratory and Directorates etc. CBEC also oversees proper tax administration for foreign and inland travel.

Types of Custom Duty

Custom duties are levied almost universally on all goods imported into the country. Export duties are levied on a few goods as specified under the Second Schedule. Import duties are not levied on a few items including lifesaving drugs/equipment, fertilizers, food grains etc. Import duties are further 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 applicable on imported items that fall under the ambit of Section 12 of the Customs Act, 1962. These duties are levied at the rates prescribed in First Schedule to Customs Tariff Act, 1975, under the terms specified in Section 2 of the act. The levied rates may be standard or preferential as per the country of import.

  • Additional Customs Duty (Countervailing Duty (CVD)):

    This duty is levied on imported items under Section 3 of Customs Tariff Act, 1975. It is equal to the Central Excise Duty that is levied on similar goods produced within India. This duty is calculated on the aggregate value of goods including BDC and landing charges.

  • Protective Duty:

    Protective duty may be imposed to shield the domestic industry against imports at a rate recommended by the Tariff Commissioner.

  • Education Cess:

    This duty is levied at 2% and higher education cess at another 1% of aggregate of customs duties.

  • Anti-dumping Duty:

    Anti-dumping duty may be imposed if the good being imported is at below fair market price, and is limited to the difference between export and normal price (dumping margin).

  • Safeguard Duty:

    Safeguard duty is levied if the government feels that a sudden increase in exports can potentially damage the domestic industry.

Custom Duty Calculations

Custom duties are calculated on specific or ad valorem basis, i.e. on the value of goods. The value of goods is determined by Rule 3(i) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. This rule pegs the value of imported goods at the transaction value that has been adjusted according to the provisions under Rule 10.

In case there are no quantifiable or objective data regarding the valuation factors, valuation conditions aren’t satisfied, or there are doubts regarding the accuracy or truth of declared value as per Rule 12 of Valuation Rules 2007, valuation of items has to be done through other means as per the following hierarchy,

  • 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)

Online Custom Duty

Online custom duty is available from ICEGATE or Indian Customs Electronic Commerce/Electronic Data Interchange (EC/EDI) Gateway. This portal allows E-Filing services to clients of Customs Department including trade and cargo carriers, collectively known as Trading Partner. ICEGATE offers services such as electronic filing of Bill of Entry, Shipping Bills, and other related messages between customs and the trading partner through e-mail, FTP and web-upload.

Shipping and airline agents can file manifests through this portal, while cargo logistics and custodians are able to interact with customs EDI for logistics and cargo related information. 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 etc. There is a 24x7 helpdesk for all the trading partners to solve issues and collect information.

Custom Duty Payment Online

Custom duty can be paid online by following the steps given below:

  • Access the ICEGATE e-payment portal
  • Enter Import/Export code or login credential supplied by ICEGATE
  • Click on e-payment
  • You can now see all the unpaid challans in your name
  • Select the challan you want to pay and select a bank or payment method
  • You will be redirected to the particular bank’s payment gateway
  • Make the payment
  • You will be redirected to ICEGATE portal, click print to save payment copy

eSanchit

eSanchit is stands for e-storage and Computerised Handling of Indirect Tax Documents. It was launched by the Central Board of Indirect Taxes and Customs (CBIC) in a bid to digitise the taxation system in India.

It streamlines trading across borders by facilitating customs-related documentation online. It allows for uploading of supporting documents and paperless processing of customs documents. Importers and exporters in India who are registered users of ICEGATE can use the eSanchit facility. They can do this by visiting the eSanchit portal on the ICEGATE website (https://www.icegate.gov.in/eSANCHIT.html). ICEGATE is the Indian Customs and Central Excise Electronic Commerce /Electronic Data Interchange (EC/EDI) Gateway. This offers e-filing services to the Customs and Central Excise Department’s clients.

The CBIC has extended the eSanchit facility to Participating Government Agencies too (PGA) so that they can provide the necessary clearances to importers and exporters in the certificate format through the facility of uploading documents online.

eSanchit eliminates the need for submitting hard copies of documents to assessing officers. Not only is the speed with which clearances are given optimized, but the physical interface between traders and customs agencies is minimised as well.

Custom Duty Calculator

You can access the custom duty calculator in the ICEGATE portal. Once you access the calculator, you will be required to enter the HS Code (CTH Code) of the good you are planning to import. Enter description within 30 characters and select the country of origin (for antidumping or preferential duty). Click on Search and you will see a list of goods that match your search criteria. Select one and you will be able to access a chart with all information related to the custom duty on selected item. This is a dynamic chart and you can enter values to check the exact custom duty you are liable to pay.

Latest rates for Customs Duty

These are the Latest Rates for Basic Customs Duty (BCD) tariffs:

Item Tariff Code (HSN) Basic Customs Duty
From To
Air conditioners 8415 10 20
Aviation turbine fuel 2710 19 20 0 5
Bath, sink, shower bath, wash basin, etc., made of plastic 3922 10 15
Colored gemstones that are cut and polished 71 5 7.5
Compressors for refrigerators and air conditioners 8414 30 00/8414 80 11 7.5 10
Diamonds which are broken, half-cut, or semi-processed 71 5 7.5
Diamonds that are lab grown 71 5 7.5
Footwears 6401 to 6405 20 25
Household refrigerators 8418 10 20
Jewlery articles and their parts, either of metal clad with precious metal or of precious metal 7113 15 20
Miscellaneous plastic articles such as furniture fittings, office stationary, statuettes, decorative sheets, bangles, beads, etc. 3926 10 15
Plastic articles for packing and conveyance such as bottles, containers, cases, insulated wares, etc. 3923 10 15
Radial car tyres 4011 10 10 10 15
Silversmith/goldsmith wares/articles and their parts made of metal clad with precious metal or of precious metal 7114 15 20
Tableware, household plastic items, kitchenware 3924 10 15
Trunks, executive cases, suitcases, briefcases, travel bags, other bags, etc. 4202 10 15
Speakers 8518 29 100 10 15
Washing machines that are less than 10kg 8450 10 20

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