The term “customs duty” refers to the tax placed on commodities as they transit international boundaries. The Customs Act and Customs Tariff Act (CTA), together with many associated rules and regulations, provide an integrated law for imposing duties on India’s imports and exports. Tariffs are imposed to safeguard each country’s economy, jobs, environment, and residents, among other things, by regulating the flow of commodities into and out of each country, particularly forbidden and restricted items. 

Every product has a tariff rate that is based on a variety of factors, such as the material it is made of, where it was created, and where it was acquired. Additionally, all new imports entering India must be declared in accordance with customs regulations. For instance, you must report any goods purchased outside of India as well as any gifts you get from outside of India.

Types Of Custom Duties

Customs duties are charged almost universally on every good which are imported into a country. These are divided into:

•   Basic Customs Duty (BCD)
•   Countervailing Duty (CVD)
•   Additional Customs Duty or Special CVD
•   Protective Duty,
•   Anti-dumping Duty
•   Integrated tax

Basic Customs Duty 

Under the Customs Act of 1962, a tax known as the basic customs duty (abbreviated BCD) is levied. It’s important to know where this customs duty originated before diving into it. The fundamental customs duties paid on imports are derived from Section 12 of the Customs Act, which addresses taxable goods. 

Countervailing Duty 

Whether they are produced or manufactured in that nation, exported there, or transported there, some goods are partially or fully subsidised by that nation. In such a situation, Section 9 of the CTA gives the central government the authority to impose anti-subsidy duties on goods in order to equalise the playing field between domestic producers and merchants in terms of subsidised imports.

By publishing in the Official Gazette, it is accomplished. This section relates to products that are not exported in the same state from the country or location of manufacturing or production as well as goods that are not imported directly from that country or place. The rule forbids, however, imposing such amounts above subsidies or for periods longer than five years.

An Additional Customs Duty Or Special CVD 

There are items that are manufactured in the United States or on which the government charges excise taxes. Section 3(1) provides for the application of a tax rate similar to the excise duty on goods imports of the same kind to avoid any appearance of injustice against domestic manufacturers or domestic producers of products.

Protective Duties

Sections 6 and 7 of the CTA empower the central government to levy protective tariffs on certain imports if it deems it necessary to defend the domestic industry. The mechanism for establishing such protection requirements is detailed and may be interpreted as follows:

To the central government, the Customs Commission of India proposes and defines the amount or rate of protective duties imposed on specific imports.

Based on such suggestions, the government shall implement the tax by publication in the official gazette if it is persuaded that it is necessary to defend the local industry. Tariffs shall not be charged in an amount that exceeds the Commission’s recommendations.

The government is required to provide such notification to Parliament in the form of a bill within six months of its issuing.

The declared responsibilities will no longer apply if the government does not comply with the foregoing, or if the law is not passed.

If the government believes that the protective duty has surpassed or failed to meet its aim, it might cut or raise the tax amount.

Anti-Dumping Duty

One of the most prevalent problems in the commercial sector is product dumping. Dumping happens when an exporter sells a product to another nation or area for less than usual. To prevent the dumping of imported goods in India, Section 9A of the CTA imposes anti-dumping fees on items sent there for that purpose.

However, the amount of the obligation that must be collected must not be greater than the dumping margin. The normal value to export value ratio and the deadline for collection must both be no longer than five years (although it may be cancelled before the specified deadline).

Integrated Tax 

Commodities imported into India would be subject to both the BCD and the Integrated Goods and Services Tax after the implementation of GST in 2017. (IGST). According to the recently updated Section 3 (7) of the CTA, the integrated tax is assessed at a rate equal to (but less than 40 percent) the rate at which the IGST is paid on goods of the same class carried in the taxable nation. The price of imported goods In addition to BCD and, if relevant, any additional obligations, the taxes mentioned above must also be paid.