What is Customs Duty in India, Kinds & Importers Calculations ?

CUSTOM DUTY

Customs duty is the tax charged on goods when imported or exported. The tax charged on the import of goods is introduced as import duty whereas tax charged on the export of goods is introduced as export duty. These taxes are charged by the government of that particular country just to increase their money and to protect themselves from other country competitors.

  • There is a new tax system in India to be known as GST (GOODS AND SERVICES TAX), this new tax collecting system says that the respective person is responsible for paying the tax when they use goods and services.
  • Firstly these taxes were charged in multiple ways like service tax, state tax, central tax, and many other but now this all taxes come under just one tax collection system called as GST (GOODS AND SERVICE TAX)

This new tax collection system has three kinds –

  • CGST (central goods and service tax),
  • SGST (states goods and service tax),
  • IGST (integral goods and service tax).
  • The CGST and SGST are implemented outside the state transactions and IGST is implemented inside the state transactions.

NOTE: presently the custom duty is known IGST, which says that IGST is applied instead of custom duty.

KINDS OF CUSTOMS DUTY

Customs duties are included around the world on the goods and services which are imported or exported from one country to another country. The second schedule includes all the terms and conditions which are required for the export duties. Import duties are not required for certain items such as food grains, drugs, equipment, medicines, fertilizers, and many more items.

The import duty is further classified into six types. Its includes

  • Protective duty
  • Basic custom duty
  • Education Cess
  • Additional Customs Duty( Countervailing Duty (CVD))
  • Anti-dumping Duty
  • Safeguard duty

 

PROTECTIVE DUTY :

Upon the recommendation of the Traffic Commissioner, the protective duty is been imposed to shield the domestic industry against the import rate.

BASIC CUSTOM DUTY :

Under section Act 1962, the basic customs duty is applicable to importing items.

EDUCATION CESS :

At 2% the duty is levied and the higher education cess is       1% of custom duties

ADDITIONAL CUSTOM DUTY (COUNTERVAILING DUTY (CVD) ) :

Under section 3 of the Customs Tariff Act, 1975, it is required to pay on all the imported items into the country.

ANTI-DUMPING DUTY :

The goods which are imported below fair market price goods are imposed by anti-dumping duty.

SAFEGUARD DUTY :

It is applied if the government detects there is an increase in the price of exportation goods which may ultimately damage the domestic industry.

ONLINE PAYMENT OF CUSTOM DUTY

  • An online transaction can be made for custom duty.
  • Open the ICEGATE e-payment portal.
  • Enter import or export code.
  • Click on e-payment.
  • The unpaid challans would be visible now.
  • Click on the challan you want to pay.
  • Now selection payment method or the name of your bank.
  • You will be directed to the bank payment gateway.
  • Make a payment.
  • The amount will be detected.
  • Now you took to the ICEGATE portal.
  • At last, save a copy of it.

GST IMPLEMENTED TO EXPORTERS

Now with the new tax collection system GST, the respective exporters from India should not pay any sort of exporting taxes of goods and services if, they are exporting their goods outside the country (India).

Earlier taxes were even imposed on the individual on the exportation of the goods and services.

GST IMPLEMENTED TO IMPORTERS

Along with the other applicable customs duties, integrated tax is also imposed on them. Import of the goods from other countries to India comes under the IGST Act2017. Also, the inter-state supplies are also intended as imports.

All the goods and services are imposed with customs duty during their import and export. This was done before the IGST was imposed.

Each and every import of goods and services include innumerable taxes such as anti-dumping duty, basic customs duty, countervailing duty (CVD), safeguard duty.

The all-over tax system was shaken upon arriving at GST. As it includes all the indirect taxes such as state-level tax, service charges, excise duty. These all together were introduced as one tax known as IGST (Integrated Goods and Services Tax). The basic custom duties were charged along with the integrated tax upon the arrival of the goods and services. 

IGST ON IMPORT OF SERVICES

As per IGST Act 2017, the supplier must be outside the country and the one who receives the services must be from India (i.e. inside the country). A well as the one who receives the services should be with in the country and to whom he is going to supply also must be within the country (India).

According to the assistance which is been included in the schedule I under the CGST Act 2017, and also including the section25 of the CGST Act, 2017, the services received from the supplier to be considered as the supply of a business. The supplies of both goods and services within inter-state come under GST, the integrated tax is also imposed on them.

Under section7 (1) (b) of the CGST Act 2017, the only imported service should be considered as supply. Generally, it is known that the services on which the tax is not imposed are considered as supply. Anyhow, the business test is not required for the supplies which are been received by the supplier from outside the country.

Even the supplier from outside the country is supposed to pay the taxes required on the basis of reverse charge. Taxes must be paid by the supplier when they are importing online information and database access or Retrieval services by unregistered, Non-taxable recipients. The inter-state supply is to be considered even if the goods or services are supplied to the SEZ(SPECIAL ECONOMIC ZONE)developer or the unit, they must also pay the integrated taxes.

TAX CREDIT INPUT

Input tax credit to be considered as IGST by the importer who is already been registered comes under the GST System. The basic customs duty (BCD) does not include the input tax credit.  During the outward supply of the goods, the importers can pay the tax using the input tax credit. Including the input tax credit, one can also take the benefit of the GST compensation Cess before the processing. GSTIN (GST Registration Number) is required for the importer in the entry bill to receive tax credit of input from GST Compensation Cess and IGST.