How Is Customs Duty Calculated In India?
- Indirect tax is also known as customs tax or customs duty.
- Customs duty is imposed on imports and exports of goods.
- The tax imposed on imports of goods is called import duty, and the tax imposed on exports of goods is called an export duty.
- The government charges customs duties at the time of imports and exports of goods and services.
- The 10% of the value of goods are charged as customs duty.
- The total amount to be paid for custom duty is determined by various factors, such as weight, value, dimensions, etc.
What Is Custom Duty?
The duty imposed on all the imported and exported goods and services is known as customs duty.
The countries around the globe charge custom duty as a means to raise revenue and to protect domestic establishments from efficient foreign competitors.
Custom duties of any goods or services are imposed as per the value, dimension, and weight or such similar criteria of the goods.
In custom duty, the value of goods is known as ad valorem duties, and weight or quantity-based duties are known as specific duties.
The combination of value and different other factor duties are known as compound duties on goods.
Custom Duty In India
- Custom duty is defined in India under the Customs Act, 1962.
- The act mentions that the Indian government can impose a tax on imports and exports of goods, ban imports and exports of goods, decide the procedures of importing and exporting, and take decisions regarding all the other penalties and offenses.
- The Central Board of Excise and Customs (CBEC) handles all the matters related to the custom duty.
- CBEC is a branch of the Department of Revenue of the Ministry of Finance.
- All the policies related to customs duties, such as collection or imposing of custom duty, preventions of smuggling, custom duty avoidance, and all the other administrative decisions related to custom administrations are formulated by CBEC.
- Various branches in CBEC take responsibility for performing fieldwork like for Custom Commission, Central Revenues Control Laboratories, Central Excise Zones, and Directorates, etc.
- CBEC also takes the responsibility to oversee correct tax administration for inland and foreign travel.
How to Calculate Custom Duty?
The calculation of customs duty is very simple and specific. Generally, based on the value of goods or ad valorem basis custom duties are calculated. In Rule 3(i) of Customs Valuation (to determine the value of imported goods) Rule, 2007, the exact value of goods is determined.
Percentage List For Custom Duty In India
Custom duties on various items are different in India. The latest percentages for Basic Customs Duty (BCD) on various items in India are mentioned below in a tabular format:-
How is Custom Tax Calculated on the Import of Goods?
With the help of the below example, we can calculate the IGST on the import of goods.
The estimated value of an imported item is Rs. 1500/-
Basic Customs Duty = 10%
Tax Rate = 15%
Now, we can calculate the tax as follows:-
Estimated Value = Rs.1500/-
Basic Custom Duty = Rs.100/-
The value of imposed tax = Rs.1500+ Rs.100 = Rs.1600/-
Integrated tax = 15% of Rs.1600 = Rs.240/-
Total of taxes = Rs.100+Rs.240 = Rs.340/-
How Is Custom Tax Calculated On The Exports?
As mentioned in the new tax system, the exports of goods and services from India to any other country are treated as ‘zero-rated supplies’. This simply means that GST does not apply to the export of goods and services. The registered taxpayers who export goods and services to other countries can claim a refund also.
How to Pay Customs Duty Online?
An Individual can easily pay the customs duty online. To pay custom duty online follow the below-mentioned steps:-
- Open the ICEGATE e-payment portal.
- Put the login credential provided by ICEGATE or by entering Export/Import code.
- Go to the option ‘e-payment’ and click on it.
- Now, you will be able to see all the unpaid challans in your name.
- Select the bank and choose the unpaid challan.
- After redirecting to the banking website, make your payment.
- After that, you will be redirected to the ICEGATE portal. Save the payment copy by clicking on the print option.
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Q. What is the similarity between export duty and custom duty?
Ans. Export duty comes under custom duty. Export duty means tax collected on exports. The tax imposed on the export and import of goods is known as customs duty.
Q. What are the different types of customs duty?
Ans. The different customs duties are Basic Customs Duty, Protective Duty, Additional Customs Duty, Anti-Dumping Duty, Education Cess, Safeguard Duty, etc.
Q. Does the Government of India impose custom duty?
Ans. Yes, the government of India imposed custom duty under the Indian Custom Act, 1962.
Q. What do you mean by specific duty?
Ans. The duties which are based on the number of goods are known as specific duties.
Q. Is custom duty applicable to imports?
Ans. Yes, a customs duty applies to both imports and exports.
Q. What are the basic customs duty rates?
Ans. The basic custom duty rate is different for different items, and it falls under 5% to 40%.
Q. Is there any custom duty on gifts?
Ans. No, the government exempts custom duty on gifts received from foreign countries to any person residing in India.
Q. What do you mean by custom duty CVD?
Ans. Countervailing Duty (CVD) comes under import tax by the importing country on imported products.