Custom Duty : Meaning, Types, Rates & Payment

What is Custom Duty?

Customs Duty is an Indirect tax collected by Central Govt. on Imports and Export of goods.  Customs Duty in India is governed by the Customs Act 1962. All the business entity who is interested in Import or export business needs to register with customs or engage a clearing forwarding agent before they can actually start the work.

Mostly Custom duty is charged on Import. Majority of exports of goods are free from Custom duty except few which Govt. wants to regulate or discourage the export of such items as per the precedent situations.

What are the objectives of custom duty?

In developing, a nation the importance of custom duty is very important for its local traders or manufacturers.

• Customs duty is applied to provide protection to the local developing industries against multinational companies by charging them some amount for a fixed period of time.
• It provides a fair and equal opportunity to both entities to expand for their market. 
• It proves a source of revenue for the government.
• It promotes the export of the country.
• It saves foreign exchange.

Is it mandatory for exporters to comply with Custom Rules although a majority of exports are exempt?

Yes, although most of the goods which are exported are out of the preview of customs, still for the purpose of effective control, all exporters need to comply with Customs rules & Regulations.

Which are the Goods which are exempted from Custom duty?

You can find the exhaustive list in the Customs Tariff Act 1975, which is subject to change in every Finance Act.  Following are broad categories which are generally exempt from Customs Duty:-

• Export-oriented units
• Certain SEZ
• Export of goods as provided in the Finance Act.
• Imports as provided in the Finance Act of that particular Year
• Imports mean for Govt. Agencies consumptions

What are the different types of customs duty?

Various types of customs duty are

• Basic custom duty
• Additional custom duty
• Countervailing duty
• Protective duty 
• Antidumping duty
• Education cess on custom duty

What are the features of custom duty?

Custom duty is implied by the government. Salient features of this tax can be discussed as:

• Customs duty is applied to the movement of goods irrespective of sales or purchase 
• Customs duty is a tax which is applied indirectly by government
• Customs duty is applicable only on goods, not on services
• Education cess is applied to it too.

How to register for Customs?

Now registration and all other compliances have been done online, you can visit the following link for more information

You can also take help of clearing forwarding agent as well to guide you to clear your imports or exports

How to calculate customs duty in India?

Customs Duty in India is generally calculated at the rate given in the Customs Tariff Act as updated by current Finance Act. The value on which customs duty is calculated on the aggregate of CIF value

• Custom Duty
• + Insurance Charges
• +Freight
• + Any other services provided by Exporter to Importer in course of import

What are Customs Duty rates in India?

 Custom duty rates in India are same as Excise duty rate of customs duty. It depends on goods and exhaustive lists are provided in the Customs Tariff Act.

How to pay customs duty online?

Payment of customs duty can be done online easily. It can be paid on the payment portal of the ICE GATE.

At the portal, you need to put your login credentials first. Then you have to select all the forms with your name and submit payment.

What is Duty Drawback?

Duty Drawback is a drawback or refund of customs duty which was paid earlier. To facilitate and encourage the export and import of certain items which are crucial, Govt. provides a full or partial refund of Customs duty paid earlier.

This facility is generally provided for an importer who imports the raw material and export final products. To understand whether your product will be eligible for Duty drawback you can consult our expert by sending an email tax@aktassociates.com.

How to claim Duty Drawback?

Duty drawback or refund of customs duty is allowed as per (Drawback of Customs Duty) rules 1995. It may be a full refund or partial as per the guidelines. To understand these rules you can write to our experts’ at tax@aktassociates.com