Customs Duty is the tax imposed on goods transported across international borders; basically, it is the tax charged on the import and export of goods. The Government of India employs the Customs Duty to raise domestic revenues, regulate the mobility of goods and protect the domestic industries. The price of Customs Duty differs based on where the goods are manufactured and what they are made of. It is also based on the value of goods or dimensions and weight. If the custom duties are based on the value of goods, it is known as Ad Valorem Duties. And if the customs duties are based on quantity and weight, they are called Specific Duties. The Custom Duty in India comes under the Customs Act (1962), which falls under the Central Board of Excise and Customs (CBEC).
| Year | Budget Estimate of the Government Customs Revenue |
| 2020 – 2021 | Rs 1,38,000 crore |
| 2019 – 2020 | Rs 1,25,000 crore |
| 2018 – 2019 | Rs 1,17,812 crore |
What is custom duty in India?
The Indian Custom Duty comes under the Customs Act (1962). According to this act, the Government charges duties on both import and export goods. They also have specific procedures, penalties and prohibitions before allowing goods into the nation. The Customs Duty falls under the Central Board of Excise and Customs (CBEC). The CBEC is a division of the Department of Revenue of the Ministry of Finance. The Central Board of Excise and Customs assists in framing policies for collecting and imposition of customs duties. The Custom Duty services include prevention of smuggling and custom duty evasions. The department of Custom Duty looks into the tax administration of inland and foreign travel. It has different divisions, such as the Commissionerate of Customs and Central Revenues Laboratory and Directorates.
Customs Duty: Purpose
- The ultimate goal of custom duty is to safeguard the country’s economy, jobs, citizens and environment. It is possible with the help of the mobility of goods in and out of the nation.
- Every good that enters the country has a predetermined rate of duty. It is decided by various criteria like where it was manufactured and what it is built of. It provides a crystal clear idea about the country’s tax with its global partners.
- The Customs duty also promotes sustainable energy, encourages the domestic industry, raises income and decreases non-essential imports.
- The Customs duty mainly supports domestic manufacturing.
Custom Duty: Types
Custom Duty is imposed on all goods imported inside the nation. The export duties are enlisted on goods specified by Second Schedule. Fertilisers, food grains and lifesaving drugs do not have import duties. Custom Duty can be divided into the following types:
Basic Customs Duty
The Basic Customs Duty is imposed on the value of goods at a specific rate. It is fixed based on the ad-valorem. The Basic Customs Duty is currently regulated by the Customs Tariff Act (1975). The Central Government holds the power to exempt specific goods from tax.
Countervailing Duty
Countervailing Duty (CVD) is also known as Additional Customs Duty. It is charged on imported goods under Section 3 of the Customs Tariff Act. The Countervailing Duty is similar to the Central Excise Duty (imposed on goods produced in India).
Education Cess
The Education Cess is raised at 2 percent and an additional 1 percent of the customs duties aggregate.
Protective Duty
The Protective Duty is charged to protect the domestic industry against the import rates approved by the Tariff Commissioner.
Safeguard Duty
The Safeguard Duty protects the rise in exports. The duty may be levied if the Government feels that an increase in exports can damage the ongoing domestic industry.
Anti-Dumping Duty
The Anti-Dumping Duty is charged when imported goods are below the fair market price. The Anti-Dumping duty is based on the dumping margin. It means the difference between the export price and the regular price.
Custom Duty: Online
The online custom duty portal is the ICEGATE or Indian Customs Electronic Commerce or Electronic Data Interchange (EC or EDI) Gateway. It provides an e-filing service for the clients of the Customs Department. The portal offers services such as trade and cargo carriers known as Trading Partners. You can do e-filing of the entry and shipping bills via ICEGATE. You can also access messages between trading partners and customs via email, FTP or web upload. The ICEGATE portal assists the airline and shipping agents with their manifests. The cargo logistics and custodians can interact with Customs EDI for information about cargo and logistics. Apart from e-filing, the ICEGATE portal allows you to track documents, e-payment, online registration of IPR, code status and verification of licences. The customer support team answers the queries and issues of trading partners.
Customs Duty: Payment
- Login to the ICEGATE e-payment portal.
- Enter the import or export code/key in the login credentials to log in.
- Click on the e-payment button.
- You will be able to view all the e-challans under your name.
- You can select the challan that you wish to pay.
- Select the payment method, and you will be redirected to the payment gateway.
- You will be redirected to the ICEGATE portal after completing the payment.
- Click on the print button.
- Save the payment copy.
Custom Duty: Rates
The Custom Duty rates belong to two categories – specific and ad valorem. The custom duty varies from 0 to 150 per cent. The average rate is 11.90 per cent. You can also refer to the list of goods exempted from customs duty.
| Custom Duty | Fee |
| Landing Charge (LC) | 1% CIF |
| Countervailing Duty (CVD) | 0%, 6%, 12% (CIFD + LC) |
| CEX: Education and Higher Education Cess | 3 % CVD |
| CESS: Education + Higher Education | 3% (Duty + CEX (Education and Higher Education Cess) + CVD) |
| Additional CVD | 4 % (CIFD + LC + CVD + CESS + CEX) |
Custom Duty: Calculator
- The Custom Duty Calculator is a simple tool for calculating the customs duty to be paid.
- The calculator is available at the ICEGATE portal.
- You must enter the CTH or HS code of the goods you plan to import. By doing it, you can gain access to the ICEGATE portal.
- Enter a description of a maximum of 30 characters.
- Choose the country of origin. It can be for anti-dumping or preferential duty.
- Click on the Search tab to view the list of goods.
- You will be able to see a list that matches your needs.
- Pick the right one.
- You can avail yourself of access to a chart loaded with appropriate information.
- Enter the values to check the exact custom duty in the dynamic chart you have to pay.
- The customs duty is calculated based on specific or ad valorem.
- The value of the goods for the ad valorem category is decided by Rule 3(i) of the Customs Valuation Rules (2007).
Custom Duty: Calculation
The Custom Duty is calculated based on the Specific or Ad Valorem method. The calculation is done by determining the value of goods. Both the specific and ad valorem values are laid by the Customs Value (Determination of Value of Imported Goods) Rules, 2007. The ad valorem value of the good is determined by the Customs Valuation Rules Rule 3 (i). Suppose there are no quantifiable data concerning valuation factors. The valuation of the items is based on a system of hierarchy if there is no measurable data concerning valuation factors.
They are as follows –
Comparative Value Method –
The Comparative Value Method compares transactions between transaction values of items similar in nature (Rule 4).
Comparative Value Method –
The Comparative Value Method compares transactions between transaction values of items similar in nature (Rule 5).
Deductive Value Method –
The Deductive Value Method employs the sale price of items in the importing country (Rule 7).
Comparative Value Method –
The Comparative Value Method uses costs related to fabrication materials and profit in the country of production (Rule 8).
Fallback Method –
The Fallback method is based on the early methods, which provide a high range of flexibility (Rule 9).
What is eSanchit?
eSanchit stands for Electronic Storage and Computerised Handling of Indirect Tax Documents. eSanchit came into the spotlight by the Central Board of Indirect Taxes and Customs (CBIC). It serves as a method to digitise the Indian Tax System. Sanchi helps streamline trading across the border by assisting the online customs-related documentation. You can upload the supporting documents, and the process is seamless. It eliminates the need to submit hard copies of documents to officers. It comes across as an optimised and minimised service.
The registered users of ICEGATE (importers and exporters in India) can access the eSanchit service. You can visit the official eSanchit portal on the ICEGATE website. ICEGATE is the Indian Customs and Central Excise Electronic Commerce Data Interchange Gateway. It provides e-filling facilities to the Customs and Central Excise Department’s clients. The Central Board of Indirect Taxes & Customs offers eSanchit service to the Participating Government Agencies. It provides the essential clearance to importers and exporters in the certificate format by uploading documents online.
Revised Basic Custom Duties
| S.No. | Items | Tariff Code (HSN) | Basic Custom Duty (From) | Basic Custom Duty (To) |
| 1. | Air Conditioners | 8415 | 10 | 20 |
| 2. | Household Refrigerators | 8418 | 10 | 20 |
| 3. | Washing Machine | 8450 | 10 | 20 |
| 4. | Compressor for Air Conditioner and Refrigerators | 8414 30 00 / 8414 80 11 | 7.5 | 10 |
| 5. | Speakers | 8518 29 00 | 10 | 15 |
| 6. | Footwears | 6401 to 6405 | 20 | 25 |
| 7. | Radial Car Tyres | 4011 10 10 | 10 | 15 |
| 8. | Non-Industrial Diamond (Cut and polished diamond) | 71 | 5 | 7.5 |
| 9. | Diamonds semi-processed (half-cut or broken) | 71 | 5 | 7.5 |
| 10. | Lab-grown diamonds | 71 | 5 | 7.5 |
| 11. | Cut and polished coloured gemstone | 71 | 5 | 7.5 |
| 12. | Articles of Jewellery or precious metal or metal clad with precious metal | 7113 | 15 | 20 |
| 13. | Articles of Goldsmith or Silversmith wares | 7114 | 15 | 20 |
| 14. | Bath, shower bath, sink, wash basin | 3922 | 10 | 15 |
| 15. | Articles of plastics for conveyance and packing such as boxes, containers, bottles, insulated wares, etc. | 3923 | 10 | 15 |
| 16. | Tableware, kitchenware, plastic household items | 3924 | 10 | 15 |
| 17. | Beads, bangles, statues, decorative sheets, furniture fittings, stationery, etc. | 3926 | 10 | 15 |
| 18. | Trunks, Suitcase, Briefcase, travel bags, other bags, etc. | 4202 | 10 | 15 |
| 19. | Aviation Turbine Fuel | 2710 19 20 | 0 | 5 |
FAQs
What is the ICEGATE Portal?
The ICEGATE Portal is an e-Commerce Portal of the Central Board of Excise and Customs. It offers services such as e-filing to the trade carriers and cargo. You can also benefit from assistance from various imports and exports.
What are the factors that influence the Customs Duty?
The value of the goods, dimensions, and weight influence the Customs Duty.
What is a Compound Duty?
It is an import tax which consists of specific and Valorem duties. It is a calculation based on the value of goods and weight or quantity.
What is a Custom Duty issue?
Custom Duty Issue is a tax on the imports made by the customs officials of a particular country. It is done to raise revenue and safeguard the domestic industry from foreign competition.
What are Specific and Ad valorem duties?
The specific duties are calculated as per the quantity and weight of the goods. The ad valorem duties are calculated based on the value of goods.
