Customs duty is an indirect tax levied when commodities are transported across international borders. The government can impose customs duty on the import or export of goods. The Indian government charges Custom duty from India, to earn revenue for the government. It protects domestic industry, protects the environment by controlling the flow of commodities into the country. Custom duty charge in India prevents prohibited and protected items from entering the country. The import of commodities depletes the foreign reserves of India. Custom duty in India helps to protect the foreign reserve and helps to manage the trade deficit. The importer must file the correct paperwork as the incorrect filling can result in penalties and delays.
Previously Indian custom Import Duty was very complicated. Apart from the basic customs duty the government charged additional duties including countervailing duty, special countervailing duty, anti-Dumping Duty, Special CVD, Protective Duty, and Safeguard Duty. In recent years the government of India introduced the GST (Goods Service Tax). The GST for importers or Custom Import Duty India is defined under the IGST Act 2017 or Integrated Goods and Service Tax. It defines commodities being brought into the country.
Calculation of IGST has two components:-
Basic Custom duty (10%)
Integrated Tax Rate (18%).
The Integrated custom duty is levied on the assessable value of the commodity + basic duty.
Under the GST system, the importer can utilize the IGST levied as an input tax credit. The importer can use the credit to make payment when they sell the commodity. The basic customs duty cannot be used for the input tax credit. Importers can attain GST Compensation Cess before transmitting it further down the supply chain.
Customs Duty Calculator is charged on the valuation of the product. Rule 3(i) is used to determine the valuation. If the valuation is not possible, it can be determined using the following hierarchy-
Comparative Value method (Rule 4) and (Rule5) comparing the goods to the transaction value of a similar product from the importing country.
The deductive Value Method utilizes the sale price of the commodity in the country of origin.
The computed Value Method uses the manufacturing costs (raw material, fabrication, etc.)
Fallback Method (Rule9)
To pay import duty to India, you need to log-in to the Indian Customs Electronic Commerce Gateway or IGate. Trading partners (traders and logistic carriers) can avail of the e-Filling services to pay the required duty online.
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