Customs duty is the direct tax on merchandise moving across international boundaries; it essentially refers to the fee paid on merchandise being imported and exported. The Indian government uses the customs duty to increase domestic revenue, control the movement of products, and defend indigenous businesses. Depending on where the items are made and what they are made of, the cost of customs duty varies. Additionally, it is dependent on the cost of the commodities or their size and weight. Ad Valorem Duties are the name for customs fees that are calculated depending on the value of the goods. The term "Specific Duties" is used to describe customs fees that are calculated based on quantity and weight. The Customs Act (1962), which is governed by the Central Board of Excise and Customs (CBEC), governs custom duty in India.
What Does India's Customs Duty Mean?
The Customs Act governs Indian Custom Duty (1962). The government imposes tariffs under this law on both imported and exported goods. Before admitting items into the country, they also have certain procedures, penalties, and limitations. The Central Board of Excise and Customs (CBEC) are responsible for the Customs Duty. The Ministry of Finance's Department of Revenue includes the CBEC as a subordinate department. Policy-making for the collection and imposition of customs duties is supported by the Central Board of Excise and Customs. Smuggling prevention and custom duty evasion are included in the custom duty services. The tax administration of domestic and international travel is examined by the ministry of custom duty. It is divided into various sections, including the Central Revenues Laboratory and Directorates and the Commissioner ate of Customs.
Objective of Custom Duty
• The protection of the economy, employment, citizens, and environment of the nation is the primary objective of customs duty. The ease with which things can move within and outside of the country makes this possible.
• Each good that enters the nation is subject to a certain rate of duty. It is determined by a number of factors, including how it was made and where it was produced. It gives a very clear indication of how the government taxes its international partners.
• Additionally, the customs duty supports domestic business, raises income, and reduces imports of non-essential goods while promoting sustainable energy.
• Customs taxes mostly fund domestic production.
Varieties of Custom Duty
All items imported domestically are subject to custom duty. The Second Schedule-listed commodities are subject to export duties. There are no import taxes on fertilizers, food grains, or life-saving medications. Following categories apply to custom duty:
Fundamental Customs Duty
A set % of the value of the products is subject to the Basic Customs Duty. Based on the ad-valorem, it is repaired. The Customs Tariff Act now governs the Basic Customs Duty (1975). Specific commodities may be tax-exempted by the central government.
Retaliatory Duty
CVD, or countervailing duty, is another name for additional customs duty. In accordance with Section 3 of the Customs Tariff Act, it is levied on imported products. The Central Excise Duty and the Regulatory Duty are comparable
An Education Tax
A 2% increase in the Education Cess is added to an additional 1 % of the total customs charges.
Defending Duty
Protecting home industry against import rates authorized by the Tariff Commissioner is the purpose of the protective duty.
Protective Duty
The increase in exports is shielded by the safeguard duty. If the government believes that a rise in exports could harm the existing domestic industry, the duty may be imposed.
Duties against Dumping
When imported goods are priced below the fair market value, the anti-dumping duty is applied. Based on the dumping margin, the anti-dumping duty is calculated. It refers to the price differential between the ordinary price and the export price.
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