Types of Customs Duty in India

Basic Customs Duty

The Basic Customs Duty is levied on the value of goods at specified rates on an ad valorem basis. Established in 1962 and governed by the Customs Tariff Act of 1975, this duty can be amended as needed. The Central Government holds the power to exempt certain goods from this tax, providing flexibility in policy implementation.

Countervailing Duty (CVD)

Countervailing Duty addresses subsidies given by foreign governments to exporters selling to India. Imposed by the Central Government under Sec 9 of the Customs Tariff Act, this duty matches the subsidy amount, ensuring competitive fairness for domestic industries.

Additional Customs Duty or Special CVD

Special Countervailing Duty is applied to balance the scale between imports and local products in terms of taxes such as VAT and service tax. This duty enhances fair trade and competitive practices by putting imported goods and domestically manufactured goods on an equal footing.

Safeguard Duty

Imposed to protect domestic industries, the Safeguard Duty mitigates damage caused by increased imports. It's calculated based on the loss incurred by local industries. This duty is crucial for preserving the competitive edge of Indian manufacturers.

Anti-Dumping Duty

Anti-Dumping Duty counteracts the practice of foreign manufacturers exporting goods at unusually low prices, potentially harming local producers. This measure, governed by section 9A of the Customs Tariff Act, is aligned with WTO agreements and is enforceable when there is a threat to local industries making 'like articles'.

National Calamity Contingent Duty

Section 129 of the Finance Act imposes this duty on products harmful to health, such as tobacco and pan masala. Rates range from 10% to 45%, depending on the product and the reason for the duty, providing revenue aimed at countering the economic impact of national disasters.

Education Cess on Customs Duty

The Education Cess is a small percentage levied on the aggregate customs duties to fund educational initiatives in India. Goods exempted from customs duty or cleared under specific procedures do not attract this cess, promoting educational funding without hindering trade.

Protective Duties

Protective Duties safeguard national industry and may be recommended by the Tariff Commission under the Tariff Commission Act, 1951. If deemed necessary by the Central Government, these duties are applied under section 6 of the Customs Tariff Act, as required to shield Indian industries.

For more information on customs duties and exemptions, you can explore related topics such as different types of customs duties, exemptions on oxygen imports, and special considerations for COVID-19 vaccines and oxygen imports.

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Frequently Asked Questions

Common questions about Understanding Customs Duties in Financial Services.

Basic Customs Duty is the duty imposed on the value of imported goods at a specific ad-valorem rate. It was introduced in 1962 and is currently regulated by the Customs Tariff Act of 1975. The Central Government has the authority to exempt certain goods from this duty.

Countervailing Duty (CVD) is imposed by the Central Government when a country provides subsidies to exporters who export goods to India. The amount of duty is equivalent to the subsidy paid by the exporting country. This duty is applicable under Section 9 of the Customs Tariff Act.

Additional Customs Duty or Special CVD is imposed on imported goods to equalize them with domestic taxes like service tax, VAT, and other local taxes. This ensures fair competition between imported goods and domestically produced or manufactured goods in India.

Safeguard Duty is imposed to protect the interests of domestic industries in India from potential harm caused by imports. It is calculated based on the loss suffered by local industries due to increased imports.

Anti-Dumping Duty is imposed under Section 9A of the Customs Tariff Act when foreign manufacturers export goods to India at prices significantly lower than their domestic market prices (known as "dumping"). This duty aims to prevent such dumping practices from crippling domestic industries or allowing foreign companies to dispose of excess stock.

National Calamity Contingent Duty is imposed under Section 129 of the Finance Act on goods that are harmful to health, such as tobacco, pan masala, and other similar products. The duty rate varies from 10% to 45%, depending on the specific reasons for imposing the duty.

Education Cess on Customs Duty is a prescribed percentage levied on the aggregate customs duties. It is not applicable if goods are fully exempted from duty, chargeable to nil duty, or cleared without payment of duty under prescribed procedures like clearance under bond.

Protective Duty is a customs duty that may be imposed on the recommendation of the Tariff Commission, established under the Tariff Commission Act, 1951. If the Central Government is satisfied that immediate action is necessary to protect the interests of the Indian industry, it can impose protective customs duty at the recommended rate under Section 6 of the Customs Tariff Act.

Protective Duty is valid until the date prescribed in the notification issued by the Central Government for imposing the duty.

The different types of customs duties serve various purposes, such as protecting domestic industries, ensuring fair competition, preventing dumping practices, generating revenue, and regulating the import of certain goods for specific reasons like health concerns or calamities. These duties help the government maintain a balance between promoting domestic industries and facilitating international trade.