Understanding Custom Duty In India
Customs duty is taxing goods crossing international borders to regulate their movement. Each product has a specific duty rate determined by its origin and composition.
Countervailing duty (CVD) is a type of duty imposed on goods that have received subsidies in their country of origin to ensure fair competition with domestic products.
Custom duty is an indirect tax imposed on goods and services that are either exported or imported. The tax on imported goods is called import duty, while the tax on exported goods is known as export duty. The government levies these taxes during the export or import process to generate revenue and protect domestic industries from foreign competition.
Since the government implemented GST, the process for calculating taxes has undergone some changes. Applicable basic customs duty (BCD) is a type of tax imposed on goods imported into India, with specific rates determined by factors such as origin and composition.
Safeguard duty is a temporary duty imposed to protect domestic industries from a sudden surge in imports.
Therefore, it’s important to consider this change when determining the net amount. The key point to remember is that IGST is calculated after all applicable customs duties have been assessed and added to the product.
India uses the CIF (Cost, Insurance, and Freight) method to calculate customs duty, which involves determining import duties and taxes based on the value of the imported goods, including shipping costs. The calculation process considers factors such as the cost of the goods, insurance, and freight charges.
IGST is a tax imposed on the import of goods and services and applies to inter-state transactions. The IGST Act 2017 defines the import of goods as bringing merchandise into India from outside the country.
In recent months, the Indian government has made significant changes to the nation’s tax system by introducing GST (Goods and Services Tax). This new tax collection system is destination-based, meaning consumers are responsible for paying the tax when they use any goods and services.
Previously, the tax system was complex, with multiple taxes like service tax, value-added tax, state tax, and central excise imposed on various goods and services. The introduction of GST has simplified this by replacing all these taxes with a single tax – GST.
GST is divided into three categories: CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), and IGST (Integrated Goods and Services Tax). CGST and SGST are applied to intra-state transactions ( which means movement of goods within India), while IGST is applied to inter-state transactions.
Custom duty has now been supplemented by IGST. This means that IGST, along with other applicable customs duties, is now applied to all imports and exports of goods and services. Let’s delve further to understand this better.
IGST, which applies to all imports and exports, is charged based on the value of the goods in addition to the primary customs duty on the goods.
The structure is as follows:
Value of Imported Goods + Basics Customs Duty + Social Welfare Surcharge = Value based on which IGST is calculated
In India, applicable basic customs duty (BCD) is a type of duty imposed on imported goods under the Customs Act of 1962. It is calculated based on the assessable value of the imported goods, which includes the cost of goods, freight, and insurance (CIF value). The duty is levied at the rate specified in the First Schedule to the Customs Tariff Act of 1975. The primary purpose of BCD is to protect domestic industries from foreign competition and to generate revenue for the government. The rates of BCD vary depending on the type and nature of the goods being imported.
One of the recent changes in customs duty occurred on September 27th, 2018, when the Indian government raised the basic customs duty on various products. This increase affected items such as footwear, washing machines, air conditioners, refrigerators, tableware, furniture fittings, and jewelry, among others.
If there is confusion regarding common valuation factors, the following exceptions are considered:
The value is determined according to the rules set forth in the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
If there are doubts about the accuracy or authenticity of the goods’ value, the valuation of such items is carried out using the following method:
The Central Board of Excise and Customs, part of the Ministry of Finance, oversees the customs duty process in the country. Whatever you plan to send to India, it’s essential to select a reliable logistics partner to ensure smooth and hassle-free shipping.
If you find all this complex, you can chat with our experts. DTDC is one of the largest carriers in India. We revolutionized the courier system in India when India Post was lagging. We have a deep understanding of Indian customs authorities‘ processes.
We can make all this very simple for you.
India primarily uses ICEGATE for all import duty and tax payments into the country. To use ICEGATE, you need to apply for an account. Once you have an account, follow the steps below to make payment.
DTDC offers a comprehensive solution for managing the entire process. You won’t have to worry about how to minimize customs duties—we handle the entire cycle for you. Within the framework of government regulations, we will explore opportunities to reduce customs duties where possible. Understanding customs regulations is crucial for compliance and smooth import/export processes. Additionally, we will manage the payment of duties and ensure that your items are delivered directly to your door. With DTDC, you can rely on a seamless and efficient customs process.
Don’t risk tax evasion; it’s not worth it. Know the customs duty rate and be upfront with customers on pricing. Use our import taxes calculator for an estimate, or visit our country’s information for a breakdown.
The customs authority can easily verify the value of your item. Listing a lower value to avoid taxes is tax evasion and is against the law.
Custom duties and taxes can be complex, leading to customs hold-ups, unexpected shipping costs, and a poor customer experience, potentially causing sellers to lose clients. We ensure you know the exact amount to pay upfront, helping you avoid unpleasant surprises and shipment delays in the future.
Do research to avoid unexpected costs later. We can help you with this research. Be aware of import duty, import taxes, and shipping costs.
Entrepreneurs can access discounted rates with DTDC.Use our express couriers and postal services to unlock deeper discounts. Consider shipping in bulk to take advantage of exceptions for import taxes and duties.
Customs Duty In India : why should I Pay Duty on My Used Items !
Customs duty is often an integral part of sending shipment to overseas. This questions often arise as soon as your shipment is crossing the border and you are subject to the customs rules and regulations of the country where your shipment is destined to. If your shipment is going to attract customs duty or not depends on the value you declared in “Customs Declaration” and based on that customs in the destination country makes a primary assessment whether a duty will apply on the item that is crossing the border.
If your shipment is crossing the border and UK or Canada or USA or so to speak any other country, it depends on the customs of the country and they have clear direction and a dollar figure of how much worth of goods can enter in the country without paying any customs duty or taxes. Australia is one of the most generous countries in the world allows your items to come in the country up to aud $1000 as long as you did not purchase online.
For India this limit is INR 2000 which is roughly about Aud $40 and if you think realistically what are you going to send to India without paying any duty ! This is a general rule however any electronics items are dutiable fully regardless of the value of the items.
Now the question is how much duty can I expect to pay ? We do not have an answer for that as this clearly depends on the physical assessment of the shipment. At this point customs in India is assessing 100% of the incoming shipment to ensure all the shipment valued over INR 2000 is paying duty. As a sender you may declare a value of the shipment as you think it s correct however customs may not agree on that and in some cases they put harsh penalty for under declaring the value of the shipment.
It is not up to the courier to company to decide the amount of duty payable rather its finalised by the customs in the country and in India duty is payable before the shipment is released.
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