Types of Custom Duty
1. Basic Customs Duty (BCD): Basic Customs Duty is imposed on the value of imported goods at rates ranging from 5% to 40% of the assessable value, depending on the type of goods being imported. It serves as a primary source of revenue for the government and regulates the inflow of goods into the country. BCD rates may vary based on trade agreements between countries.
2. Integrated Goods and Services Tax (IGST): IGST is levied on imported goods based on the Harmonized System of Nomenclature (HSN) code, with the value for IGST calculation potentially including amounts for safeguard duty or anti-dumping duty. It ensures uniformity in tax rates and promotes the seamless movement of goods across state borders. IGST is a destination-based tax levied on goods and services.
3. GST Compensation Cess: This cess is imposed to compensate states for revenue loss due to the implementation of GST and is calculated at 15% of the IGST value. It serves as a transitional measure until a specified date, aiding in the smooth transition to the new tax regime. GST Compensation Cess applies to specific luxury and sin goods.
4. Higher Education Cess: Education Cess has been charged at 2% of the aggregate of customs duties. It comes with an additional Higher Education Cess at 1%, which is also applicable. These efforts contribute to funding educational initiatives and enhancing the quality of education in the country. Education and higher education courses are used to support government educational programs.
5. Countervailing Duty on Subsidized Articles (CVD): CVD is imposed to counteract subsidies given by exporting countries and is overseen by the DGAD (Directorate General of Anti-dumping and Allied Duties). It aims to create a level playing field for domestic producers and prevent unfair trade practices. CVD rates are determined based on the subsidy provided to the exporting country’s industry.
6. Anti-Dumping Duty: This duty is levied on imports to discourage dumping practices and can vary from 0% to 550% of the invoice value of the goods. It protects domestic industries from cheap imports and ensures fair competition in the market. Anti-dumping duty rates are determined based on the difference between the export price and the normal value of the goods.
7. Safeguard Duty: Safeguard duty is applied when there is a sudden surge in imports, providing domestic producers with time to become more competitive. It is typically imposed for a specific period and helps safeguard the interests of domestic industries. Safeguard duty rates are determined based on the increase in imports and their impact on domestic producers.
8. Social Welfare Surcharge on Imported Goods: This surcharge is calculated at 10% of the aggregate of customs duties, taxes, and cesses imposed by the government. It aims to generate additional revenue for social welfare programs and initiatives. Social Welfare Surcharge is used to fund various social welfare schemes, including healthcare and poverty alleviation programs.
9. National Calamity Contingent Duty (NCCD): NCCD is imposed on specified goods as per the Seventh Schedule of the Constitution of India, with rates varying based on imported goods. It serves as a measure to generate funds for addressing national calamities and emergencies. NCCD rates are determined based on the nature and severity of the calamity.