In India, customs duties are charged on goods imported or exported from the country, at predetermined rates specified under the Customs Tariff Act of 1975. Various amendments have been made in the provisions of the Act relating to custom duties till date, as deemed necessary. In 1962, Customs Act was formed to thwart illegal imports and exports of goods in India. Besides, taxes are levied on such goods in order to protect indigenous industries as well as to minimize the rate of import.
Keeping a check on the flow of imports also secures the exchange rate of Indian currency. Central Government has full authority to monitor the flow of imports and exports in India. The periodical issue of ‘Indian Customs Tariff Guide’, published under the Central Board of Excises Customs (CBEC), brings out the various tariff rules and regulations issued by CBEC. Apart from ‘Basic Duty’ (5% to 40%), imposed under the Customs Act, the following types of duties are considered to be taxable.
Additional Duty or Countervailing Duty (CVD)
Keeping in accord with the section 3 (1) of the Custom Tariff Act, CVD is equal to excise duty imposed on a similar product manufactured or produced in India. In case, such a product is not manufactured or produced in India, CVD would be equal to the excise duty imposed on that product, had it been manufactured or produced in the country. Moreover, another Additional Duty is levied under section 3(3) of the Customs Act, wherein charges can be made by Central Government on all goods, to offset excise duty attributable to raw materials and other inputs, similar to those employed in the manufacture of such goods.
Anti-Dumping Duty
Anti-Dumping duty is generally levied on imports of products from abroad, wherein the import of these goods in India at low prices is believed to jeopardize the development and growth of Indian industries. Dumping duty can also be imposed when goods are imported indirectly or imported after making certain alterations in their conditions.
Protective Duty
The notification for imposing dumping duties must be introduced in the Parliament in the next session through a bill or in the same session if Parliament is in session. In case, the bill is not approved within six months of introduction, the notification might cease its power, but the action taken under the notification remains valid. Such duty remains valid till the date specified in the notification.
Duty on Bounty Fed Articles
If a foreign country finances exporters for exporting goods to India, Central Government has the power to impose additional import duty that equals to the amount of such subsidy. This duty is known as ‘Duty on Bounty Fed Articles’.
Export Duty
Export duty is levied on export of certain goods like skins and leather. This duty is implemented to prevent the export of certain goods from the Indian market.
Duty-free Items
Certain permissible duty-free items include clothes, jewelry, cameras (including 5 rolls of films), tent and other camping materials, binoculars, a musical instrument (portable), radio or portable tape recorder, fishing rod, pair of skis, two tennis rackets, 200 cigarettes or 50 cigars, 95 liters of liquor and gifts not exceeding the value of Rs. 600.
