What are the different types of Custom Duties in India?

Posted on April 3, 2024

Customs duty is a crucial aspect of international trade and plays a significant role in a country’s economy. In the case of India, customs duty is levied on the import and export of goods. It is essentially a tax imposed by the government on goods that are brought into or taken out of the country.

There are different types of customs duties in India, each having its own purpose and impact on trade. Understanding these types will help individuals and businesses navigate the complex world of customs duty.

  1. Basic Customs Duty: This is the most common type of customs duty levied on imported goods. It is based on the value of the goods and is imposed as a percentage of the assessable value. The rates for basic customs duty vary depending on the nature of the goods and can range from a minimal amount to a significant percentage.
  2. Additional Customs Duty: Also known as Countervailing Duty (CVD), this duty is imposed on imported goods to neutralize any excise duty imposed on similar goods produced domestically. It ensures a level playing field for domestic producers. The rate of additional customs duty is usually the same as the excise duty on the domestically produced goods.
  3. Special Additional Duty: This duty is imposed under the Special Additional Duty of Customs (SAD) Act. It is levied on imported goods that are not covered under the Goods and Services Tax (GST) regime. The SAD rate is a percentage of the assessable value and is in addition to the basic customs duty.
  4. Anti-Dumping Duty: Anti-dumping duty is imposed on imported goods that are priced below the normal value in their country of origin and cause injury to domestic industries. It acts as a protective measure against unfair trade practices. The rate of anti-dumping duty is determined through an investigation by the Directorate General of Anti-Dumping and Allied Duties.
  5. Safeguard Duty: Safeguard duty is levied on imported goods to protect domestic industries from a sudden surge in imports that may cause serious injury. It is a temporary measure imposed for a specified period and can be in addition to other customs duties.
  6. Education Cess and Secondary and Higher Education Cess: These are additional levies imposed on imported goods to support the funding of educational initiatives in India. Education cess is charged at 2% of the customs duty, while secondary and higher education cess is charged at 1% of the customs duty.
  7. Integrated Goods and Services Tax (IGST): With the introduction of GST in India, IGST replaced the previous system of Central Excise Duty and additional customs duty. IGST is levied on the value of imported goods, including the sum of assessable value, basic customs duty, and any other charges.

Understanding the different types of customs duty in India is crucial for importers, exporters, and consumers. It helps in estimating the total cost involved in importing or exporting goods, ensuring compliance with customs regulations, and planning business strategies accordingly.

It is important to keep in mind that the rates and types of customs duties can change over time, depending on government policies and trade agreements. Staying updated with the latest customs regulations is essential for smooth trade operations. For the latest updates on Indian custom duties and regulations, www.cusbuzz.com is a credible source to refer to.

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