CUSTOMS DUTY

By Bharathwaj R(906) & Suryanarayanan(930)

 MEANING
■ Customs duty is an indirect tax, imposed under the
Customs Act formulated in 1962.
■ The customs Act 1962 is a basic statue which governs
entry or exit of different categories of vessels, aircrafts,
goods etc. into or outside the country.
■ This Act is applicable across INDIA.
 IMPORTANT PURPOSE
■ Regulation of import and exports
■ Protection of domestic industry
■ Prevention of smuggling
■ Conservation and augmentation of foreign exchange
Types of customs duty on import
 TYPES OF CUSTOMS
DUTY
■ Basic customs duty ■ Protective duty
■ Countervailing duty ■ Safeguard duty
■ Special additional duty ■ CVD on subsidized
■ GST compensation duty articles
■ Anti dumping duty
Basic customs duty
■ Levied as percentage of value.
■ It is of two types
■ 1. Standard – Fixed rate
■ 2. Preferential – Preferential rates for
import from countries specified by
central government
■ The owner of the commodity has to
produce necessary evidences that the
goods comes under preferential rates.
■ 0 – 100% based on HSN code and the
origin of product.
Countervailing duty
■ It is equivalent to the amount of
excise duty on like goods
manufactured / produced in INDIA.
■ It is a specific form of duty that the
government imposes in order to
protect domestic producers by
countering the negative impact of
import subsides.
■ This duty is subsumed into GST
■ It is applicable on goods where GST
is not applicable.
■ 0 – 12% rate based on tax breaks and
subsidies.
Special additional duty
■ Applicable on some imported goods,
where the locally produced
equivalents would be subject to sales
tax.
■ This is to make sure the domestic
commodity is not at a disadvantage.
■ 4% is standard rate on applicable
goods.
■ It is now subsumed under GST.
■ It is applicable on goods where GST
is not applicable.
GST compensation duty
■ It is levied on luxury and demerits
goods.
■ Paid by all taxpayers except who
export notified goods and those who
have opted for GST compensation
scheme.
■ It is collected for the first five years
after implementing GST.
■ It is distributed every two months
since 1st July 2022.
Protective duty
■ In order to protect any industry
established in India, a duty has been
imposed on the recommendation of
tariff commission.
■ Here the tax rates are set at a level
which increases the price of the
imported goods higher than that of
domestically produced.
Safeguard duty
■ Safeguard duty is a duty levied on
import of commodities that are
already made in country but have a
high cost relative to the import cost.
■ The tax rate if set at a level which
nullifies the price differences.
CVD on subsidized goods Anti dumping duty
■ When a good which has been ■ When any article to exported to India
imported got a subsidy from its own from any other country at a price
country, then central government can lower than normal price is called
notify state governments to impose dumping.
CVD on such goods.
■ The anti dumping duty is imposed to
■ Tax rate are fixed to equalize the prevent such dumping from
subsidy rate. happening.
■ Normal price – export value= anti
dumping duty.
THANK YOU