Import duty and taxes need to pay when importing or exporting products and services goods in India. The custom duty is applied on private company or even a commercial entity.  The valuation technique is CIF (Cost, Insurance and Freight), which implies that the import duty and taxes allocated are measured on the whole shipping value, which compromises the cost of freight, the cost of the imported goods, and the cost of insurance. Especially duty in applied is measured on the whole of the CIF value as well as landing charges. Some duties are also depends on quantity concerns. Additionally to the duties, imports are focus to other taxes and charges including Countervailing Duty, Landing Charge, CESS, and CEX. 

Who Governs Custom Duty

According to the Section12 of the India Customs Act, Custom Duty is liable to pay on Goods, belonging to Government and even not belonging to Government. Section 2(22), provides complete definition of ‘goods’ as – ‘Goods’.

Goods

According to the Section12 of the India Customs Act, Custom Duty India is imposed on Goods, going to Government as well as goods not belonging to Government. Section 2(22), offers complete definition of ‘goods’ as – ‘Goods’ includes:

  • Vessels, aircrafts and vehicles
  • Stores, Baggage
  • Money and negotiable instruments and
  • Any other sort of movable possessions.

Purposes of Custom Duties

The customs duty is charges, principally, for the following reason:

  • Limiting Imports for protect foreign exchange.
  • Saving Indian Industry from excessive competition.
  • Banning imports and exports of goods for finding the policy points of the Government.
  • Managing export.
  • Co-coordinating legal terms with similar laws dealing with foreign exchange include Foreign Trade Act, Conservation of Foreign Exchange, Foreign Exchange Regulation Act and Prevention of Smuggling Act among others.

Rates to Duty

Duty rates in India can be ad valorem or particular rupees per unit.  According to the quantity and quantity vary from 0% to 150%, with a standard duty rate of 11.9%.  Some goods are not liable for paying duty such as laptops and similar electronic products.

Three different types of imposing Customs Duty:

Specific Duties: – Specific custom duty is imposed on each and every unit of a product imported or exported. i.e. Rs.5 need to pay for each meter of cloth imported or Rs.600 on all T.V set imported.

Advalorem Duties: Advalorem custom duty is imposed on the total value of a service imported or exported. Here, the physical units of product are not taken into thought.

Compound Duties: – Compound custom duty is the right mixture of specific and advalorem custom duties. Here, both the quantities and the value of the commodity are taken into consideration.